4 Ways to Avoid Losing Money in Your FSA This Year
Healthcare is a major expense for millions of working Americans, and opening a flexible spending account, or FSA, is a great way to make it just a bit more affordable. As a quick refresher, here's how FSAs work: You contribute a certain amount of money to that account up to the annual limit (currently $2,700, though it's rising to $2,750 in 2020), and that money goes in on a pre-tax basis. That means the IRS can't tax you on the amount you put in.
Here's how that might play out. Say you contribute $2,000 to your FSA and you're in the 24% tax bracket. That translates into $480 of tax savings.
The problem with FSAs, however, is that they require you to use up your funds by the end of each plan year. If you don't, you risk forfeiting your remaining balance. And you're generally required to determine your FSA contribution during open enrollment, before your plan year kicks off. This means that unless you experience a qualifying life event (like the birth of a child), that contribution is set in stone for the coming year.
Source Fool.com
