The Health FSA is a valuable tool for individuals looking to save money on taxes by deducting their contributions from their paycheck before taxes are withheld. This can lead to significant tax savings, depending on an individual’s specific financial situation.
The maximum contribution limit for the IRS in 2024 is $3,050, which can be used towards qualifying health expenses. However, it is important to note that the Health FSA is a “use-it-or-lose-it” plan. Participants are allowed to carry over a certain amount each year, but any unused funds 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, individuals must carefully monitor their expenses and ensure that they use their allocated funds effectively within these deadlines. By doing so, they can avoid losing any unspent money and take advantage of the tax savings offered by the Health FSA.