MINNEAPOLIS — The end of the year is approaching, and if you own a flexible spending account, now is the time to check your balance and see if you have money left to spend before it runs out.
The deadline to spend your FSA money is Sunday, December 31st.
However, many FSAs offer grace periods of up to two-and-a-half months, so you may have a little more time. Some accounts also allow rollovers into the new year.
The IRS says you can rollover up to $610 in 2023 to 2024, but FSA plans must allow rollovers, and not all plans allow rollovers.
Check out your plan to see what options you have. If you have any questions, please contact your plan administrator or human resources department.
If you have no choice but to spend your money or lose it, here are some ideas.
You can also buy new glasses and contacts and stock up on contact solution.
You can purchase a first aid kit for your home.
We’re also in the middle of cold and flu season. You can also stock up on hand sanitizer, disinfectant wipes, and over-the-counter cold and flu medicines.
If you’re starting a family, you can buy pregnancy tests and prenatal vitamins with FSA money.
If you’re looking forward to summer, sunscreen and products that treat insect bites and poison ivy are also covered, according to the IRS.
In 2024, the FSA limit will increase to $3,200, meaning account holders will be able to save even more money next year, potentially leaving them with even more money at the end of 2024.
If you want to avoid the same problem next year, you may want to review your spending and health and consider reducing your FSA contributions.
All this information may make you want to ditch the FSA altogether and save yourself the headache, but remember: An FSA can save you hundreds of dollars in taxes each year.
So even if you lose a little money each year, you may still be saving money in the long run.
In addition to FSAs for medical expenses, there are also FSAs for dependent care that can help parents save on taxes if they use childcare or other services for their children.
The IRS says the dependent care FSA limits will remain unchanged in 2024. The same $5,000 limit will remain in effect in the new year.
Don’t confuse an FSA with a Health Savings Account (HSA).
With an HSA, your funds don’t expire at the end of the year and you can invest the money in your account in stocks, bonds, and other investments.
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