How to Maximize 2024 Tax Savings with Flexible Spending Accounts (FSAs)
As we approach the end of the year, it’s crucial to make the most out of your Flexible Spending Account (FSA) to maximize tax savings. FSAs allow you to set aside pre-tax dollars for qualified medical, dental, and dependent care expenses. However, the “use-it-or-lose-it” rule means you’ll forfeit any unspent funds at the end of the year or within a short grace period, depending on your employer’s policy. Here’s how you can ensure you’re not leaving any savings on the table:
1. Review Your FSA Balance
First, check your FSA balance to understand how much you still have to spend. You can typically access this information through your benefits portal. Keep in mind that most FSAs have a contribution limit of $3,050 for 2024.
2. Know the Deadline
Most FSAs follow the calendar year, meaning you need to use your funds by December 31, 2024, unless your employer offers a grace period or a carryover option. Some employers allow a grace period up to March 15 of the following year, while others may permit up to $610 to roll over into the next year. Check with your HR department to confirm your deadlines.
3. Make Eligible Purchases
FSAs cover a wide range of medical expenses. In addition to doctor visits and prescriptions, eligible expenses also include over-the-counter medications, eyeglasses, contact lenses, dental work, and even certain wellness products. Stock up on these items to avoid losing any unspent funds.
4. Consider Upcoming Medical Needs
If you have upcoming procedures or medical needs—such as dental work, new glasses, or elective treatments—schedule these appointments before the deadline to make the most of your FSA.
5. Utilize Dependent Care FSAs
If you have children, remember that dependent care FSAs can be used for childcare expenses such as daycare, preschool, and summer camps. Take advantage of this benefit to reduce your taxable income while covering necessary expenses.
6. Submit Claims on Time
Make sure to submit all eligible claims before the deadline. Even if you’ve made eligible purchases before the end of the year, you’ll need to submit receipts and paperwork within the allowed timeframe to be reimbursed.