And Why Do I Need to Use It?
The IRS allows taxpayers to deduct medical expenses, but only if they are a significant part of your annual costs. For example, in 2018 medical expenses have to be greater than 7.5% of your income and in 2019 the percentage goes up to 10%! As a result, although most taxpayers have medical expenses throughout the year, they do not have enough of them to deduct the cost from their taxes. To meet the needs of these citizens, the IRS allows for Flexible Spending Accounts (FSA) so you can still realize tax savings from your medical expenditures, like dentistry.
How Does an FSA Work?
With an FSA, you elect to reserve a certain amount of money from your salary for medical expenses. The FSA provider then puts that amount in an account reserved for your family medical costs. You get to use this money right away, a huge advantage of an FSA. Then, a small amount is deducted from each of your paychecks for the rest of the year. In effect, an FSA is a zero percent loan for medical expenses.
Plus, the money you pay for your FSA is considered tax-free. Therefore, you do not have to pay withholding or annual income tax on these expenditures. This makes the FSA a tremendous benefit for families with middle or lower income levels.
The Disadvantage of an FSA
The problem with an FSA is that if you don’t spend the money every year, you lose it! Although some providers allow a certain amount of rollover for FSA funds ($500 is permitted by some), others do not allow any rollover! Either way, you need to make certain that you spend your FSA dollars every year by December 31st.
Therefore, the Marconi Dental Group wants to remind you that if you have put off dental work, including cosmetic dentistry, now is the time to make an appointment before the year ends and the opportunity to spend your FSA dollars runs out. Call us at 916-589-6462 or make an appointment online to use your money today!