Most Popular Questions
Are expenses paid with an HCFSA tax deductible?
If you use a Health Care FSA (HCFSA) to pay for eligible health care expenses, you cannot deduct those same expenses on your federal income tax return. However, your entire allotment (FSA contribution) is deducted from your pay before taxes are taken out, so it's considered pre-tax.
If you itemize your medical expenses on your tax return, you can only deduct the amount of your total medical expenses that exceed 10 percent of your adjusted gross income (AGI). By contrast, when you use an HCFSA to pay for medical and health care expenses, you receive a tax deduction without having to meet the 10 percent AGI minimum.
The money you allot to an FSA is also exempt from FICA (Social Security and Medicare) taxes, a deduction that is not available on your federal income tax return. If your eligible medical expenses exceed the 10 percent threshold by a significant amount, you might want to consult with a tax professional to determine which option is best for you.