Don't
Miss Out on this Tax Benefit
Millions
of people carry HSA-qualified plans, often because these plans are so much
less expensive than conventional copay plans. People who are young and
healthy, or people who are older but health conscious, don't go to the doctor
that often and would rather save the money. But many people miss out
on the greatest tax-savings opportunity available.
Anyone
who has an HSA-qualified health insurance plan is allowed to deposit pre-tax
dollars into a special bank account, called the HSA or health savings account.
Because this money is not taxed, it is deducted directly from your adjusted
gross income when you are preparing your taxes.
It
Will Save You Some Money
Running
a business and raising a family and tending to personal finances, and doing
everything else we all do – we’ve all got to be good time managers
these days. As I’ve mentioned in a previous letter, during the
rush I somehow neglected to make a deposit to my HSA for 2008. I did
not make the same mistake in 2009.
Wiley and Wiley IV
Anyone
who had an HSA-qualified plan in place no later than December 1 2009 can deposit
up to $5950 (for families) or $3000 (for individuals) into their HSA.
That deposit right there may save you a fair bit on your federal income tax
return. Almost every state will also give you the deduction.
So
missing that deposit cost me hundreds of dollars in extra taxes, but it doesn’t
stop there. The deposit in an HSA grows tax-deferred, just like with
an IRA. Not paying taxes on the growth of your investment can greatly
accelerate your returns. You can invest your HSA in stocks, bonds, mutual
funds, or virtually anything you like.
You
Have Until April 15th
You
have until April 15th to make a 2009 deposit into your HSA. You can
also get a head start, and make your 2010 deposit. The contribution
limits for this year are $3050 for individuals, and $6150 for families.
The sooner you make your deposit, the sooner you will be taking advantage
of tax-free growth.
If
you are trying to decide between placing money in an IRA or an HSA, that one
is a no-brainer. This is because that any withdrawals from your HSA
are tax-free, as long as you have medical expenses to back up the withdrawal.
Save
Your Receipts
Remember
to save your receipts any time you pick up some cold medicine or a prescription.
Ditto when you go to the eye doctor or dentist, or incur any other medical
expenses. You can immediately reimburse yourself from your HSA, or you
can let the money continue to grow tax-free, and take it out at a later date.
If
you need to open a health savings account, you can find a list of banks we
recommend by going to the HSA Admins link on our home page.
To your health and wealth,
Wiley
Long
President - HSA
for America
P.S.
- Next month we'll talk about natural ways you can reduce your risk of cold
and flu this winter.
