Business & Finance Taxes

How to Prepare Taxes With FSA

By Business & Finance Last updated Wednesday, April/24/2024

1). Get a copy of the W-2 from your employer and look at the total compensation listed in each category. Since the money diverted to an FSA is not subject to federal tax, your federal taxable wages should be lower than your state or local wages.
2). Decide whether or not itemizing your deductions will save you money. In order to make that determination you will need to gather all of your paperwork, including receipts for business expenses, mortgage interest and charitable deductions. Add up all of your allowable deductions and compare the total to the standard deduction allowed by the Internal Revenue Service.
3). Complete your itemized deductions on Schedule A if the amount of your itemized deductions is higher than the standard deduction. When completing Schedule A, be sure not to include any medical expenses that were reimbursed from your FSA account.

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