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Ladies and gentlemen, the near-impossible has happened: A Republican and a Democrat have jointly proposed a advisable law. Congressmen Charles Boustany (R-La.) and John Larson (D-Conn.) have introduced the Medical Flexible Spending Account Improvement Act (H.R. 1004) bill, which could help Americans setting alongside money for medical expenses reserve more of what they've saved.

Flexible Spending Accounts (FSAs) let you sock away pre-tax greenbacks from your salary to spend on enabling medical expenses. Right now,cheap Kids Underwear outlet online shop, your employer determines the limits on your FSA contributions, however a current restrict of $2,500 will apply starting in 2013, with adjustments for inflation afterward.

Don't underestimate the FSA's power. If you earn $50,000 per year, and endow $4,000 annually to an FSA for health-care expenses, you'll reduce your taxable income to $46,000. At a 25% marginal tax rate,cheap Sunglasses outlet online shop, that ambition save you $1,000 in earnings taxes!

The grab -- and the fix
But up until immediately, this splendid tool's had a "use-it-or-lose-it" rule; if you don't spend all of your allotted money in a given year, whatever's left disappearances. That may annotate why, as of 2010, only 20% of U.S. workers were using FSAs, according to Hewitt Associates. As Joe Jackson, chairman of Save Flexible Spending Plans and CEO of benefits provider WageWorks, explains, "Unfortunately, the 'use it or lose it' rule creates an unnecessary risk for FSA participants and a deterrent for non-participants."

It's estimated that a 15 min of participants forfeit some of their money every year. A tool that was averaged to help personnel save money actually ends up costing them a aggregate of almost $85 per forfeiture, which ends up in employers' coffers.

Boustany and Larson propose changing the rules so that whichever money left in the list at year's end isn't forfeit. Instead,cheap Caps&Hats outlet online shop, it can be withdrawn, with the operator paying the previously shirked tariff on the amount. Presto -- a simple fix.

If you've got an attitude on this proposition, consider adjoining your representatives in Congress, to let them know.

Spend smart
Until or unless the rules get revised, you're stuck with the use-it-or-lose-it provision. If you alarm ending up with remnant asset, take a closer see at fit expenses -- you may be competent to apply more of your health-related costs than you think. Qualifying expenses comprise listening aids, psychiatrist visits, weight-loss or smoking-cessation programs, co-pays, X-rays, teeth cleanings, cups, and much more. Your FSA can even cover transportation costs to receive therapeutic attention.

By production the most of FSAs -- especially if the use-it-or-lose-it provision namely expunged -- you can save lots of money. Visit the following sites for many extra tips on how to be tax-savvy:

Yahoo! Finance Tax CenterThe Motley Fool Tax Center

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