Can anyone give me flexible spending advice?

[FirstTimer90]

In my job I am being offered a chance to withhold money for a flexible spending account. I am in my late 20s without health problems. I didn't visit any doctors offices outside of my dentist last year (2 co pays), and I don't take any medications.

Is there an advantage of putting money aside into my flexible spending account in my situation? I do not have children.

Please, anyone who can help I look forward to your comments.

[Like2Plan]

How about the eye Dr? Do you wear glasses or contact lenses? How much are your co-pays?

It doesn't sound like you have much need for a FSA--especially when the funds are use or lose at the end of the year.

[Jerry91]

Well, as far as I know, you will need a Flexible Spending Account (FSA) in order to pay for your copayments, deductibles, some drugs, and other health care costs. FSAs are limited to $2500 per year. If you are not in need of any of these things, then it doesn't make sense to go for a FSA.

[FirstTimer90]

Am I correct to understand that a Flexibile Spending Account is Pre-tax dollars used for medical bills? If I were to have the need to spend a lot of money in 2014 for health reasons, could I just use that as a write off on my taxes next year or doesn't it work that way? Or would that cost me more money?
Thanks

[Like2Plan]

Am I correct to understand that a Flexibile Spending Account is Pre-tax dollars used for medical bills? If I were to have the need to spend a lot of money in 2014 for health reasons, could I just use that as a write off on my taxes next year or doesn't it work that way? Or would that cost me more money?
Thanks

FSAs are generally much better. They take the FSA money right off the top--you don't pay Federal, state or FICA taxes on that money.
If you write the money off on your taxes:
1. You have to have enough write offs to itemize in the first place.
2. Your medical expenses don't count as write offs until you've reached 7.5% of your AGI.

http://www.irs.gov/pub/irs-pdf/i1040sca.pdf

[dfeucht]

You mention it is a Flex Spending Account, which as folks have said if you don't expect to use any medical care in 2014, you should not put money in it as it is a use it or lose it situation.

On the other hand if you have a health plan that has a $1,250 deductible (in 2014) you are eligible to put up to $3,300 in an Health Savings Account (HSA). This is similar to an FSA in that the money is tax deductible, and it needs to be used for health services, but it is not "use it or lose it", is your money and it goes into an account that is yours regardless of where you work. You can build up an account for health costs down the road that can be used into retirement if necessary.

You didn't ask about an HSA, but thought I would mention it just in case your situation meets this criteria some day you can look into it.

[QuarterMillionMan]

I believe that beginning in 2014, the IRS allows $500 in an FSA to be rolled over to a subsequent year if not used the previous year. Even with this change in policy and unless you know that you will be using the funds, the "use it or lose it" clause cannot get me to buy in. Also in 2014 (I believe), the IRS is increasing the medical deduction from 7.5% to 10% of your AGI. Just some other tidbits to factor. An HSA (in my opinion) is a better option if you qualify for it.

[FirstTimer90]

I believe that beginning in 2014, the IRS allows $500 in an FSA to be rolled over to a subsequent year if not used the previous year. Even with this change in policy and unless you know that you will be using the funds, the "use it or lose it" clause cannot get me to buy in. Also in 2014 (I believe), the IRS is increasing the medical deduction from 7.5% to 10% of your AGI. Just some other tidbits to factor. An HSA (in my opinion) is a better option if you qualify for it.

Will the IRS lee the $500 be rolled over if I quit my job or I'm fired?

Is the HSA something I set up at work or is that something I do on my own?

[Like2Plan]

I believe that beginning in 2014, the IRS allows $500 in an FSA to be rolled over to a subsequent year if not used the previous year. Even with this change in policy and unless you know that you will be using the funds, the "use it or lose it" clause cannot get me to buy in. Also in 2014 (I believe), the IRS is increasing the medical deduction from 7.5% to 10% of your AGI. Just some other tidbits to factor. An HSA (in my opinion) is a better option if you qualify for it.

Wow, they have made it even harder to write off medical deductions.
One caution about the $500.00 rollover change: while the IRS allows this option the employer doesn't have to implement it. DH's employer is "studying their options". So, it is really important for OP to know the provisions of her company plan.

[MonkeyMama]

Also in 2014 (I believe), the IRS is increasing the medical deduction from 7.5% to 10% of your AGI.

This took effect in 2013.

[MonkeyMama]

Will the IRS lee the $500 be rolled over if I quit my job or I'm fired?

Is the HSA something I set up at work or is that something I do on my own?

It sounds like you don't have much use for a FSA - I wouldn't bother. If you have medical bills in the future you can reconsider.

You are only qualified for a HSA if you have a high deductible health plan that meets certain parameters. It's a medical savings "IRA" basically, that you can use for retirement purposes if you never need it for medical expenses. I would only recommend if you were already maxing out 401k, IRAs, etc. already. Or if you wanted to hedge your bets and save small amounts for future medical expenses. & even then, only if you were in a higher tax bracket than 15%. The tax break isn't terribly useful otherwise (in exchange for all the hoops you have to jump through).

An HSA can be offered through employer or set up on your own.