Funds from a Flexible Spending Account (FSA) cannot be used for teeth whitening expenses. The U.S. Internal Revenue Service (IRS) issued Publication 502, Medical and Dental Expenses, which specifically excludes various medical expenses spent on unnecessary cosmetic procedures, such as teeth whitening.
Flexible Spending Accounts
FSAs are primarily for salaried employees, since only qualified employers can establish and administer FSA plans; self-employed individuals are ineligible from opening FSAs. Both contributions to and distributions from FSAs are exempt from federal income tax and employment tax, as long as FSA beneficiaries use the funds for qualified medical expenses and spend as much as they contributed in a particular year.
Qualified Medical Expenses
Publication 502 defines qualified medical expenses as those that are included in an FSA plan description and would qualify for medical and dental expense deductions. To qualify, a medical expense must have a doctor's prescription, even if a drug can be bought over the counter, except for insulin. An FSA beneficiary can also include medical expenses that he used for the prevention and alleviation of dental issues. Preventive dental procedures include teeth cleaning, obtaining sealants and other services that treat and prevent tooth decay. Individuals can also use FSA funds for expenses necessary to treat dental diseases, such as fillings, braces, dentures, extractions and X-rays.
The IRS specifically prohibits using FSA funds for cosmetic procedures and cosmetic surgery to improve appearance that are not necessary to treat or prevent a disease. Medical expenses on procedures that do not qualify for FSA distributions include face-lifts, liposuction, hair removal and teeth whitening. However, the IRS allows medical expenses paid for cosmetic procedures that are necessary to correct for deformity resulting from congenital issues, an accident, trauma or a disease that caused disfiguration. FSA owners face tax consequences for any unqualified medical expenses. (For related reading, see "Flexible Spending Accounts for Dental Care")