2018 FSA Changes: Use a Flexible Spending Account to Cut Your Tax Bill
Millions of workers have access to flexible spending accounts, which are tax-saving vehicles that let you set money aside on a pre-tax basis from your paycheck to cover anticipated healthcare or dependent care expenses. Used correctly, FSAs can produce huge tax savings, and limits on contribution amounts typically get adjusted each year. In 2018, the amount you can put in an FSA will rise slightly compared to 2017 figures. Below, you'll learn more about what changes are slated to take effect in 2018 and why flexible spending accounts have been such a popular way for workers to save.
The key change for flexible spending accounts in 2018 affects those who use FSAs for healthcare costs. The annual limit is tied to the inflation rate, and price increases over the past year will lift the contribution limit to $2,650 for 2018. That's $50 higher than the corresponding figure was in 2017.
It's important to understand the distinction between medical FSAs and dependent care FSAs. If you're saving money for child care costs, then a fixed annual limit of $5,000 applies to nearly all taxpayers, with the only exception being a lower $2,500 maximum for married couples who file separate returns.
Source: Fool.com
