A few weeks ago, we talked about the availability of ASPs for freelancers. But there is an important distinction between freelancers and entrepreneurs. Freelancers work for themselves and often work for different clients at the same time. A contractor usually has a contract signed with a client to perform a specific role for a specific period of time. There is no doubt that the gig economy is growing. About 11 percent of U.S. workers are full-time entrepreneurs, according to Nation1099. Freelancers are also on the rise. The popular independent platform Upwork reports that 57.3 million people in the United States work as freelancers full-time. Note: If you believe you have been wrongly classified as an independent contractor and should be an employee, you may be eligible to change your status with your employer and have access to benefits such as an ASP.) So be sure to explore your tax-efficient options when it comes to covering the cost of child care. Because let`s be honest: even homeworkers sometimes need a little help.
There`s good news for those with kids: If your spouse can give you access to an ASP, you can use your FSA to pay for approved over-the-counter medical items like a contact lens solution, a nasal spray, breast pumps and accessories, and even copays. Items that contain an active medical ingredient such as acne medications, sleeping pills, and allergy medications are also eligible. It`s worth mentioning: In general, you can`t have both an HSA and an FSA (with a few exceptions). The Child Tax Credit (CTC) and the Supplementary Child Tax Credit (CCTA) can also help offset the cost of child care. These tax credits can be up to $2,000 per eligible child. The child must be under the age of 17, have lived with you for at least half of the tax year, and be a U.S. citizen. Finally, you may want to open an HSA if you are self-employed and currently enrolled in a high-deductible health care plan (HDHP). HSAs are similar to ASPs in that they cover medical costs such as over-the-counter medications, prescriptions, and co-payments. Unfortunately, the IRS says that self-employed workers are not eligible for ASPs. I know it hurts a bit.
If you have a spouse who is eligible for an ASP through their employer, they should consider opening one, as you and all dependent children are also eligible to use these funds. And one of the reasons for this steady increase towards home-based employment? Parenting and childcare, as well as the ability to create your own hours to fit the ever-busy schedule of a growing family. If you`re a contract worker, you probably appreciate the freedom that comes with work, when you want, where you want, or even to continue when work no longer interests you. Whether you`re budgeting from week to week or considering using your ASP for bigger things, our weekly real money column will help you maximize your flexible spending. Look for it every Tuesday, exclusively in the learning center FSAstore.com. And for the latest information on your health and financial well-being, follow us on Facebook, Instagram and Twitter. You can also consider an FSA for dependent care, which allows you to pay for child care under the age of 12. In particular, summer camps, preschool classes, and daycares, to name a few.
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