Most Popular Questions
Medical expenses that exceed 10 percent of your adjusted gross income (AGI) can be deducted on your federal income tax form. However, FSAs are tax-free from the first dollar. You do not have to meet the 10 percent AGI minimum before receiving the deduction.
Further, money set aside through an FSA is also exempt from FICA (Social Security and Medicare) taxes. This exemption is not available on your federal income tax return. However, you may wish to consult with a tax professional to determine which option is best for you.