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I have an FSA and I used it to buy my contact lenses recently. The contacts come with an offer for a rebate if you buy a whole year supply, which I did.

Is the money I get from the rebate tax-free, like the FSA money?

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  • Rebates like this are not taxable, because they are considered to be reducing the purchase price of the item.
    – EkoostikMartin
    Commented Feb 23, 2015 at 16:41

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Generally, you're only supposed to claim from FSA the amounts you actually paid. The rebate reduces the costs, so it should also reduce the amounts you claimed from FSA. That would make the rebate "after-tax" money. However, in reality, many people "cut the corners" and double dip by submitting the full receipt to the FSA and getting a rebate. That would not be entirely legal to the best of my understanding and I'd advise against it. If the FSA administrators know about the rebate program - they will ask you if you got/will get a rebate and reduce the FSA payout accordingly.

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