With so many changes happening with our tax code every year, it is really important that you sit down and review how this will affect your family finances. As 2015, approaches us, one tax issue that could affect your family center around the changes intertwined with Flexible Spending Accounts (FSA’s) and Health Savings Accounts (HSA’s).
In many prior years, traditionally FSA’s were you use it or you lose it plans if the money is not spend by year-end. Since 2013, you were allowed to roll money over from the prior year and carry it forward into the current. However, going into 2015 there is a BIG twist that you should consider before the 2014 year is over.
If you elect to carry forward the $500 in your FSA plan from 2014 into 2015, you will immediately become ineligible to participate in a Health Savings Account for 2015. This is true for the entire calendar year. So, if you opted to change plans from a low deductible plan to a high deductible plan tied to a Health Savings Account for 2015, it may actually be in your best interest to NOT carry a $500 balance over from your current FSA account into 2015. Essentially, you would nullify your health insurance and savings strategy. Note that the rule applies to general purpose FSA’s, and note FSA’s used for specific uses such as dependent care of dental expenses.
That is one big tax issue to watch for going into 2015!