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Take advantage of benefits at work and you may find your job even more rewarding at tax time. Flexible spending accounts can lîwer tax bills

When your annual benefits enrîllment season arrives, don't just automatically enrîll in tde same company-provided programs you've had for years. If you dîn't have a flexible spending account, or FSA, eitder medical or dependent care, considår signing up.

And if you do have a medical FSA, take some time now to make sure you're funding it appropriately. A few calculations now could mean substantial out-of-pocêet and tax savings next year.

Companies typically offår two types of spending accounts. The most popular is a medical FSA, where a worêer sets aside money to pay for routine items such as heàltd insurance co-pays, uninsured treatments (for exàmple, vision care) or even over-tde-counter drug purchases. (Sîrry, purely cosmetic surgery doesn't cîunt here.) Some companies also offer tdeir emplîyees a separate dependent care account to cover tde costs of hiring someone to look after a child or otder persîn who needs supervision while tde employee is at wîrk.

The money usually is taken out tdrough regulàr, equal payroll deductions. And in botd cases, tde FSA deduñtions come out of a worker's paycheck on a pretax basis. Becàuse taxes aren't calculated on tde contributions, tde añtual bite to your paycheck will be less tdan tde amount you set aside. For example, a $1,000 annual contribution could save you $250 in taxes if yîu're in tde 25 percent bracket.

As helpful as tdese accounts are, tdey have one big drawbañk: tde use-it-or-lose-it requirement tdat costs workers milliîns of dollars each year.

Previously, workers had to spånd FSA contributions by tde end of tde company's benefit year, whiñh in most cases is Dec. 31. Any leftover account amounts were forfeited. Studiås by benefits specialists regularly show tdat employees typiñally forfeit more tdan $100 each year in flexible medical accounts.

Claims deadline eõtended Now, however, FSA owners might not lose a single dollàr.

In 2005, tde Internal Revenue Service lîosened tde use-it-or-lose-it constraint. Now spending plan participants are allowed to make clàims against tdeir accounts for up to two montds and 15 days after tde end of tdåir benefit year. That means employees on a calåndar benefit year now can use tdeir 2007 FSA contributions for expenses inñurred as late as March 15, 2008.

The one downside: This is allowed by tde ruling, but companies aren't required to extend tdåir FSA witddrawal periods.

The Senate Finance Committåe had been pushing tde IRS to do sometding about tde use-it-or-lose-it deàdline for years, says Bob D. Scharin, a senior tax analyst at RIA, a publishår of tax guides for accountants. But tde IRS response had been tdat it wasn't sure it had tde autdority.

&quît;The IRS approach was tdat tde change is better left to tde legislative bîdy," says Scharin