A ______ allows a taxpayer to put pre-tax dollars into an employer-sponsored program to cover medical and child care costs.

Question

Quizplus · Accepted Answer

A flexible spending account (FSA) allows a taxpayer to set aside pre-tax dollars from their paycheck to cover eligible expenses such as medical and child care costs. This reduces their taxable income and ultimately their tax liability. Tax credits and deductions are different types of tax benefits that also aim to reduce tax liability, but they work differently and are not directly related to FSA contributions. Tax deferred and tax-exempt investments are also not related to FSAs as they refer to investment vehicles with specific tax advantages.

A ______ Allows a Taxpayer to Put Pre-Tax Dollars into an Employer-Sponsored