Paycheck Chronicles

Flexible Spending For The Military

The 2010 Defense Authorization Bill contains a very interesting provision that may help military families stretch their dollars a little further by allowing them to utilize a pre-tax Flexible Spending Account (FSA)  to pay for certain expenses, usually health care and child care.

FSAs are offered by private and government employers and can be a huge benefit if your family pays taxes and  has child care and/or medical costs not covered by Tricare.  I'll use my family as an example.  In a usual year, we are in the 15% tax bracket.  (I'm really just estimating here, because it seems we never have a "usual" year.)  We also spend about $1000 on child care and about $2000 on non-covered medical expenses (mainly a lot of glasses.)  If we reduce our taxable income by $3000, our tax bill would go down $450.  We're spending the money anyway, it would be nice to be able to do it with pre-tax dollars.

Eighteen senators sent a letter to President Obama, urging him to work with Secretary of Defense Gates to ensure that this benefit is organized promptly.  Let's all hope that it happens soon!

Show Full Article

Related Topics

PayCheck Chronicles

More from Paycheck Chronicles

View more

Most Recent Military Pay Articles

View more