The Flex New Mexico Spending Accounts offer you a convenient way to pay for medical and dependent care expenses while you save on your taxes.
There are two types of accounts:
The Medical Reimbursement FSA, and
The Dependent Care FSA
You may elect to contribute a portion of your BEFORE-TAX income each pay period to either or both of the accounts. This money – free of taxes – is used to reimburse you for eligible unreimbursed expenses incurred by you and your eligible family members during the year.
What Do You Mean BEFORE TAX?
FSAs enable you to set aside money from your paycheck BEFORE you have paid federal and state income taxes and social security taxes. The amount you set aside reduces your reported W-2 income, so you are never taxed on these savings.
How Does It Work?
Medical Reimbursement FSA
The Medical Reimbursement FSA is for medical, dental and vision expenses that are not reimbursed by any coverage you and your eligible family members may have. You may set aside up to $5,000 per year to pay for your unreimbursed medical expenses.
For Medical Reimbursement FSA purposes, your eligible family members are your spouse, your children or any individual who you claim on your tax return as a dependent.
Eligible Medical Expenses
As a general rule, any medical expense that would qualify as a deduction on your federal income tax return qualifies as an eligible expense under the Medical Reimbursement FSA. Examples of eligible medical expenses include:
Deductibles, copayments, and coinsurance
Charges exceeding reasonable and customary amount, and
Other non-covered charges
To be sure that an expense is eligible, check the current Internal Revenue guidelines, IRS Publication 502.
Dependent Care FSA
You may use the Dependent Care FSA to pay for qualified dependent care expenses that enable you (or your spouse if you are married) to work or actively look for work. You may also qualify if your spouse is disabled or a full-time student. Your may set aside up to $5,000 per year for dependent care expenses. The IRS imposes special limits on contributions to dependent care accounts; see your group agency representative for more details.
Eligible Dependent Care Expenses
Examples of eligible dependent care expenses include:
- Care for children under 13 years old that you may claim as dependents on your federal tax return.
Your spouse or any person of any age who is physically or mentally incapable of self-care tat you are entitled to claim as a dependent on your federal tax return.