Flexible spending arrangements are accounts set up by your employer that allow you to make pretax contributions through payroll deductions. You might have a health FSA, a dependent care FSA or both. With either type of FSA, you get reimbursed for qualified expenses from the balance in the account, and the money is tax-free. The contributions may show up on your W-2 form.
Health FSA Optional
Health flexible spending accounts are used to reimburse you for qualified out-of-pocket medical and dental expenditures. An employer may choose to list its annual contribution amount in box 14 of your W-2 form. The entry is for informational purposes only. Do not deduct FSA contributions from your taxable income, because they are not taxed when deducted from your paycheck.
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Dependent Care FSA Required
Dependent care FSAs work much like health FSAs, but the reporting requirements are different. Employers must report dependent care FSA contributions in box 10 on your W-2 form. You include this information on Internal Revenue Service Form 2441 to report child and dependent care costs. Attach Form 2441 to your tax return. Again, contributions are already pretax, so do not deduct them from your taxable income.
