John M. Hoffman & Associates CPAs

Frequently Asked Tax Questions

Medical Expenses

"Should I consider participating in a medical reimbursement plan at my place of work?"

If your employer offers a plan where you can set aside part of your earnings into some flexible spending account or the likes and you can get reimbursed for out of pocket medical expenses, you should definitely consider it.

These arrangements are generally a "use it or lose it" deal. This would seem to be the only pitfall here in that if you set aside the money for medical and then you don't need it, you lose the money.

However, if you know that during the course of the year, you will need $800 for dental visits, $300 for eye glasses, and $200 for prescription medications, having that $1,300 set aside at work for reimbursement has those expenditures come out of pre-tax money which is even better than a tax deduction. If you think you will need $1,300 but only feel safe setting aside $1,000 and biting the bullet on the other $300 rather than risk forfeiting unused dollars, that is not a bad idea either.

A theme throughout tax planning is that anything you can receive with pre-tax dollars is about as good as it gets.