Use Funds in a Flexible Spending Account (Year-End Tax Tips)

If you have money set aside in a flexible spending account (FSA), the end of the year is a good time to check on your balance and use up any remaining funds. Pre-tax funds contributed to an FSA can be spent on eligible expenses incurred during the tax year, although you have until March 15th to submit paperwork to the plan administrator for reimbursement. For Medical FSAs, this would be a good time to dig up receipts for co-pays and out-of-pocket deductibles, to stock up on prescriptions, or to buy eyeglasses or get a routine physical or dental exam. Even non-prescription, over-the-counter medications qualify for reimbursement from a medical FSA. You may even be able to tap into your FSA funds using a debit card, which can eliminate paperwork and waiting for a reimbursement. Funds not spent by the end of the year are forfeited to the plan administrator, which we commonly refer to as the "use it or lose it" rules.

More information:

• Flexible Spending Accounts (from IRS Publication 969)
• Software Tools for Flexible Spending Accounts (About Financial Software)