ShopFSA Friday with Sean - 2/16/18 - A first look at flex spending and your taxes
Happy Friday, everyone! This week, I'm stepping in for Sean while he enjoys some warm weather fun a few months ahead of spring. And, while the warmer temps of mid-April seem like they're light years away, tax season is already here. This means the media discussion of personal finance and healthcare savings is in full swing.
This week, let's take a look at a few of the many headlines populating our news feeds, and see what's trending in the ongoing personal healthcare and tax discussion.
Analysis: The tax benefits of a health savings account - Thomas Heath, The Washington Post
This time of year, mainstream media outlets offer up a lot of "overview" discussion on flexible spending accounts (FSAs) and health savings accounts (HSAs). But few of them open as directly as Thomas Heath, who says, "Any time you can protect your money from the tax man, I want in."
Using real-life examples of conversations Heath had with his wife and his employer's human resources department, Heath offers a quick, succinct breakdown of each type of account, what the common misunderstandings are, and what the tax ramifications might be.
Though there are much more thorough resources to be had about your flexible spending tax options (starting right here and here), this piece does a good job whetting your appetite for deeper discussion.
Do workers saving in both 401(k)s and HSAs end up cannibalizing one account for another? - Marlene Y. Satter, BenefitsPro
With so much of today's personal finance discussion focused on putting aside retirement money, while also paying down current medical bills, this BenefitsPro article is perfectly timed. According to the author, a recent study shows that workers who put funds into both a 401(k) and a health savings account are saving more overall than those who just put money into a single account.
She goes on to dispel some common myths about whether saving to one type of account could cannibalize potential savings to the other.
Note: Viewing the entire article requires you to set up a free BenefitsPro account, but we recommend doing so, since the author does a good job breaking down trends and figures about these accounts, contribution analyses and more.
Fewer than half of parents take advantage of this money-saving tax break - Leslie Albrecht, MarketWatch
Here's a sobering thought from this MarketWatch article: Parents could save more than $2,000 a year on child care costs, but more than half leave the money on the table, according to a survey of 1,100 parents by Care.com.
Here's another one: While most parents (67%) know they could save on child-care costs with a tax break called the dependent care flexible spending account, only 44% actually use one.
In this piece, author Leslie Albrecht points out potential sources of child-care tax savings that you can get, even if you don't have a dependent care FSA. And if you do, she also explains how these account holders can still take advantage of the federal child-care tax credit. It's a worthy read for any parents seeking a break from rising daycare costs, and seemingly unforgiving tax scenarios.
Tax season can be a complicated time, but we're here to help. For the latest about your health and financial wellness, you can turn to our Learning Center, Facebook, Instagram and Twitter pages for the info you need to #GetFlexSmart.
Is your FSA tax prep complete?
As April 15 approaches, it's important to consider the benefits of your FSA. A recent article in USA Today stressed some of the tax breaks you could be enjoying and noted, "Even after April 15, make sure you're not missing out on other valuable tax breaks for the rest of 2015—namely, pre-tax contributions to an employer-sponsored retirement plan or flexible spending accounts for medical, child care and transit expenses. "That's money left on the table," Labant said."
Flexible Spending Accounts can cover a variety of expenses - ranging from healthcare products to medical services - and this is all on a pre-tax basis.
Do I submit additional paperwork when it comes to taxes (if I have an FSA)?
Money is taken out of your paychecks on a pre-tax basis every month, which reduces your taxable income. You don't have to do any additional paperwork come tax time. What you should always keep in mind is how much money is available in your FSA account throughout the year, so you can fully utilize the benefits of the plan.
Can I ever change how much I contribute to an FSA?
Employers provide an open enrollment period during which you can add or change your coverage options, including your FSA contributions. You can contribute up to $2,550 per year to an FSA. Once the FSA plan year has begun, changes to your FSA are typically only allowed if there is a qualifying event, which may include getting married, changing jobs, and certain other circumstances. Each FSA plan defines the circumstances in which you can change your contribution. Your FSA administrator can confirm these with you, and your Summary Plan Document outlines provisions of your FSA plan.
Again, the best way to use your FSA is to keep tabs on it during the plan year. Be sure to apply it for different out-of-pocket medical expenses ranging from medical care to healthcare products.
Check out FSAstore.com's FSA Eligibility List for a full list of eligible expenses like products and services.
