The following are some of the characteristics of a flexible spending account:
- An employer can set up an FSA with a U.S. financial institution for their employees, which is a tax-free account.
- The purpose of an FSA is for the employee to save money without any taxes and use it solely for medical expenses expected in the current year.
- The amount paid into an FSA is contingent upon the type of coverage provided by the taxpayer. Up to $3,200 can be contributed by the taxpayer to a Health Care FSA or a Limited Expense Health Care FSA in 2024. Contributing up to $5,000 or $2,500 if married filing separately under a Dependent Care FSA in 2024 is permitted for the taxpayer.
- Contributions made up until April 15, 2025, may be included for 2024 in Health Savings Account (HSA) contributions, as opposed to FSA contributions. FSA contributions are deducted from the employee's paycheck.
What is the deadline for contributing to FSA in 2024?
Contributing to a Flexible Spending Account (FSA) in 2024 is typically done on December 31, 2024.
Nevertheless, a few employers may extend a grace period of up to 2.5 months into the following year. Either by mid-March 2025, or allowing for the rollover of unused funds to a specific limit.
