FSA Tax Savings

Flexible Spending Accounts (FSAs) are a valuable part of the benefits package provided to you by your employer. They allow you to set-aside money for eligible healthcare and day care expenses on a pre-tax basis, saving you anywhere from 25% to 45% (depending on your tax bracket)!  FSAs are a tax break you can't afford to ignore!

Tax Savings

FSAs allow you to pay for eligible expenses with gross (pre-tax) instead of net (after-tax) income leaving a smaller amount of income subject to taxation. You pay less in income taxes and your spendable income increases. The following table illustrates potential tax savings:

Extra income by participating in an FSA: $ 846 

Dependent Daycare FSAs

Dependent Daycare FSAs allow you to save on child (or elder) care expenses such as babysitting, daycare or in-home care while you and you spouse are working. Depending upon your income, you can save more than federal tax child credits. You can contribute $5,000 for a married couple filing jointly or a single parent; or $2,500 for a married person filing separately. 

Healthcare FSAs

Healthcare FSAs cover a wide variety of eligible out-of-pocket (not covered by health insurance) expenses for you and your family. Please note that as of 1/1/2011, OTC medicines, in general, are no longer eligible for reimbursement due to healthcare reform.