While you're out there spending like crazy this week on gifts for everyone else, don't overlook yourself.
Are your shoulders and neck aching because of all the heavy packages you've been carrying? See a chiropractor and get that maligned spine realigned. Or is your pain something as simple as sore feet and pounding head from dealing with the shopping hordes? Take a couple of aspirin, kick back in your favorite chair and head back to the mall tomorrow.
The best part, if you're thinking taxes this time of year (and who isn't?), these two pampering actions can be paid for out of your medical flexible spending account. Flexible spending accounts are available to many employees as part of their benefits package. With an account, you're able to put in money before taxes are taken out via withholding, meaning the IRS gets a smaller bite of your income. Then you can use the cash later to pay for many out-of-pocket medical costs, such as copayments and over-the-counter medications.
The one bad thing about FSAs is that if you don't use the money you've put in the account by the end of your benefit year (Dec. 31 for most folks), you lose it. Earlier this year, the IRS gave employers the option of extending until March 15 the deadline that employees have to spend all their prior-year FSA money. Unfortunately, the number of companies offering the extension is still small, so that means that FSA owners are scurrying to spend up their money.
Philip, a Don't Mess With Taxes reader, e-mailed me to inquire about the possibility that FSA owners could one day roll over unused amounts from year to year. Legislation to allow that has been periodically introduced, even making it through the House of Representatives in 2004, but it never completed the full trek to make it into law. I expect advocates of such rollovers will keep trying, but unless there's a groundswell to show them that's it really important to their voters, it's likely to keep suffering the same close, but no-cigar fate. By the way, you can pay for smoking cessation programs with FSA money.
Donna LeValley, a tax guru with the annual J.K. Lasser income tax guide, offers several other ways in this story to wisely spend your FSA money by Dec. 31. My favorite, especially in light of all the natural disasters we've seen in the last year, is to invest in a quality first aid kit. Consumerism Commentary also offers a link in this blog posting to a very thorough list of FSA-eligible expenses. Check it out if you still have medical account cash to burn.
And speaking of burn, if your spouse (or mother-in-law or son or whoever is in charge of the annual holiday dinner) is not a very good cook, remember to stock up on the Rolaids and Tums and Pepto-Bismol. They are FSA-approved OTC purchases.