As you head out on this Christmas Eve to pick up last-minute presents, don't forget a tax-related gift for yourself.
This is the last year that you can easily spend medical flexible spending account, or FSA, funds on over-the-counter, or OTC, medications.
With this workplace benefit, you put money in your FSA before it's taxed. Then you use the funds to pay for allowable medical expenses. For years, OTC drugs have filled up the shopping bags of FSA owners looking to spend down their accounts, usually by Dec. 31, so they don't lose the money.
The OTC option has been tightened beginning in 2011 thanks to a provision in the health care reform act. Next year, you'll need a doctor's prescription for that NyQuil and Tylenol for it to be FSA reimbursable.
I bring this up now because if your holiday family gathering is anything like mine, those antacids (sure, Mom, I'll have another piece of pie), aspirin (cousin Jim can you keep your kids quiet for just five minutes?!) and cold treatments (really, Uncle Billy, we're glad you decided to come visit even though you have that terrible cough) will come in very handy.
- Get ready for FSA changes: IRS issues OTC rules
- FSA spending time is here
- Time running out to tap FSAs
- Flexing your medical account muscle
- Spend your FSA
- Tax-break relief for tax-induced headaches
- March 15 is FSA deadline for some
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