Cut Your Tax Bill With a Flexible Spending Account

One of the more interesting and useful ways to take a benefit right off the top of your earned income is to use a tax-free health or flexible spending or savings account.

There are a bunch of different flavors of these tax-advantaged health care accounts, and depending on your employer, you might have access to one or more kinds.

Cut Your Tax Bill With a Flexible Spending Account

Arrow

A Flexible Spending Account (FSA) can be an important tool to help you meet financial goals to save more and reduce your taxes.

What is a Flexible Spending Account?

The maximum amount you can put into an FSA in 2022 is $2,850. When you participate in this benefit, your employer deducts an amount from each paycheck to fund it. 

FSA Tax Benefit

The FSA is not a normal savings account since it is a benefit designed to finance your annual out-of-pocket medical expenses. You can lose whatever amount is left unspent in the account at the end of the year.  

There Is a Catch

The biggest difference between flexible spending accounts (FSA) and health savings accounts (HSA) is that you have more control over your HSA and can save up contributions over several years to build wealth.  

HSA versus FSA

SWIPE UP NOW TO READ MORE

The Broken Clock

MORE STORIES

How to Teach Teens About Investing