Contributing to a Health FSA can be an effective way to save money on taxes. With this plan, you can deduct your contributions from your paycheck before taxes are withheld, which reduces your taxable income and can lead to tax savings. In 2024, the maximum contribution limit for the IRS is set at $3,050, which can be used for eligible health expenses.
However, it’s important to note that Health FSA is a use-it-or-lose-it plan. Participants are allowed to carry over a certain amount each year but anything over that carryover amount will be lost if not spent on eligible expenses by the end of the year and claimed by the deadline. For 2024, the carryover amount is set at $640 and the deadline to submit claims is April 15, 2025.
To maximize the benefits of this contribution method, participants must carefully monitor their expenses and make sure to use funds allocated within deadlines. By utilizing tax savings offered by Health FSA effectively, individuals can save money on their taxes while also covering eligible health expenses.
Overall, contributing to a Health FSA can be a smart way to reduce your taxable income and save money on healthcare costs. However, participants should be aware of the plan’s limitations and take steps to use funds allocated within deadlines to avoid losing any unspent money.
