Is there any advantage to using a FSA instead of claiming medical expense on tax returns?

Question

Using my FSA is pretty annoying.  I have to submit claims and scramble to use it or lose it.  Is there any advantage (aside from perhaps cash flow) of using an FSA over just claiming my medical/childcare expenses on my taxes?  Is there a higher max or something?  Because it seems to me that I'm just better off claiming everything on my taxes and being done with it!

mbhunter · Accepted Answer

To claim medical expenses on your taxes they need to exceed 7.5% of your AGI, and then only the amount over 7.5% is deductible. That's not much. There is no "floor" if you use an FSA as it's all pre-tax.

If you're concerned about use or lose, then allot less next year. It's all what you're comfortable with.

If you're concerned about use or lose, then allot less next year.  It's all what you're comfortable with.

JTP - Apologise to Monica · Answer

mb's answer for FSA was dead on.
You also mention child care - The child care credit comes with a phaseout based on income, the Dependent care account allows you to set aside up to $5K pretax money to covers these costs. It's pre-FICA and medicare as well, so the savings can be 33% pretty easily.

jldugger · Answer

A normal FSA also gives you a short term loan: money earmarked is available in entirety immediately, while you repay it every paycheck. This is interest free, and if you time your large planned medical expenses for January, can be a nice cheap loan.

Answered by jldugger on May 3, 2021

Is there any advantage to using a FSA instead of claiming medical expense on tax returns?

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