MINNEAPOLIS — The year is coming to an end and for folks who own flexible spending accounts, now is the time to check your balance to see if you have any money left to spend before it disappears.
The deadline to spend your FSA money is Sunday, Dec. 31.
However, a lot of FSA’s have a grace period of up to two-and-a-half months, so you may have a little more time, and some accounts also allow rollovers into the new year.
The IRS says in 2023, up to $610 can be rolled over to 2024, but your FSA plan needs to allow rollovers — and not all of them do.
Check your plan to see what your options are. You can reach out to your plan's administrator or your HR department if you have questions.
If you don't have any other option but to use the money or lose it, here are some ideas.
You can buy a new pair of glasses or contacts, and stock up on contact solution.
You can buy a first aid kit for your home.
We're also in the middle of cold and flu season, you can stock up on hand sanitizer, disinfecting wipes and over-the-counter cold and flu medicines.
If you're starting a family, pregnancy tests and prenatal vitamins can be purchased with FSA money.
And if you're excited about summer, sunscreen and products that treat bug bites and poison ivy also qualify, according to the IRS.
In 2024, the limit for FSA's will increase to $3,200 so account holders will be able to save even more money next year, and potentially have even more money left over at the end of 2024.
If you want to avoid having this same problem next year, take a look at your spending and your health situation, you may want to consider dialing back your FSA contributions.
After hearing all of this information, you may be tempted to just drop the FSA altogether and save yourself the headache, but remember this: With FSA's you can save hundreds of dollars on taxes every year.
So, even if you do lose a little money each year, you're likely still saving money in the long run.
Besides FSAs for medical expenses, there are also FSAs for dependent care that help parents save money on taxes if they utilize childcare and other services for their children.
The IRS says the limit for dependent care FSAs will not change in 2024. The same limit of $5,000 will stay in effect in the new year.
FSA’s should not be confused with Health Savings Accounts (HSA).
With HSAs, the money doesn’t expire at the end of the year and the money in the account can be invested into stocks, bonds and other investments.
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