The birth of a newborn baby is a qualifying life event. Most babies are born perfectly healthy, yet they still translate into additional medical expenses for follow up doctor visits. Those born with medical issues may generate far more.
A qualifying life event enables parents to make changes to their health care flexible spending account outside of the open enrollment. Forecast your eligible expenses, and act accordingly.
Parents of children with special needs often spend much of their time sitting in waiting rooms waiting to see the doctor, dentist, physical therapist, optometrist, etc. They have so many different medical needs.
Healthcare flexible spending accounts expand the list of eligible expenses for tax-favored treatments. Unfortunately, the Affordable Care Act placed a cap on the amount parents can contribute.
Umbilical cord blood banking acts like an insurance policy against future illnesses. Like any insurance program, you hope you never need it. The money spent banking the blood cells goes down the drain unless used.
Cord blood banking is an eligible heath care flexible spending account expense when used to treat an existing medical condition. The ongoing nature of these expenses makes them an ideal fit.
The contribution limit for childcare expenses is $5,000 annually. The same limit applies whether you have one child in day care or five. The childcare tax credit works differently. The size of you deduction is either $3,000 or $6,000 depending upon the number of children requiring supervision.
Do you use just a flexible spending, just the tax credit, or both? The answer depends upon your income and tax bracket.
Many people mistakenly assume that dependent care flexible spending account eligible expenses consist only of traditional childcare programs: preschool, nursery school, and other similar programs.
The list of qualifying expenses is much broader, and last far longer into childhood than many realize. At $1,030 in annual savings, it pays to know everything that might work.
You could have the sharpest accountant on the planet, and still leave money on the table by neglecting a dependent care flexible spending account. Many people get overwhelmed by the complexity, and the use it or lose it rule.
The child-care tax credit works better for low-income workers. Any family earning more than $43,000 annually should run the numbers, and see the advantage of using an FSA instead.
Contribution limits are the one rule regarding depending care flexible accounts that most parents would like to change. The average cost of childcare for just one child is much larger than the annual limit, which leaves parents with greater out of pocket expenses.
The use-it-or-lose-it rule rarely comes into play with this form of FSA. The other regulations make it almost impossible for parents to overestimate, and lose their annual contribution.