Catch a tax break on flex spending account — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

Catch a tax break on flex spending account

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in Human Resources,Small Business Tax

Q. I've paid about $2,500 into my flexible spending account (FSA) this year, but I’ve already claimed $3,250 in medical expenses. Do I have to pay the difference if I switch jobs? A.F., Port Washington, NY

A. No. The cost is generally absorbed by your employer if you quit before your health FSA contributions “catch up” with your expenses. In effect, you’ve received free money. On the flip side, if the amount of your contributions exceeds your expenses when you switch jobs, you’re not entitled to a refund.

Tip: You forfeit any unused funds in the FSA at the end of the year. But the IRS has approved a 2½-month grace period that employers may allow employees to use.


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