Thursday, April 7, 2011

Changes to flexible spending accounts

Flexible Spending Accounts are employee benefits that allow you to set aside a portion of your earnings to pay for certain approved expenses, such as medical costs or dependent care. Money deducted from your pay into such an account is not subject to payroll taxes and can result in tax savings.

However, as YNN television reports, recent changes to flexible spending accounts may create new confusion, and new tax liabilities. For example:
As of January 1st, over-the-counter drugs were not supposed to be covered under flexible spending accounts, but things like contact solution and band-aids were still eligible. Even pharmacists say keeping it all straight is proving to be a challenge.

For more information on health care spending accounts and eligible expenses, check out the above link. In addition, make sure to obtain competent tax law and financial advice from a qualified attorney or accountant.