An FSA allows money to be deducted from an employee’s paycheck pre-tax and then spent on qualified expenses. For an example of potential tax savings associated with a flexible spending account, a person in the 28% Federal marginal tax bracket and an example 4% state tax (along with FICA taxes of typically 7.65%, for a total tax of almost 40%), could deduct $2,000 and put that money into an FSA for health care. This would result in almost $800 in tax savings.
Did you know you can use your FSA to pay for dental treatment, including insurance copays? But FSA amounts have to be set aside in advance and if you don’t use the money, you lose it. Regular dental examinations will help you plan how much to put aside for the coming year. So take that extra step and save almost a third of your dental expenses.