Now that the year end is almost here, many taxpayers are scrambling to find a way to lower their tax liability; one way is through making Health Savings Account Contributions. It’s an often over-looked manner of lowering your tax liability, but it can be a tremendous help when it comes to ensuring you get what you want in terms of a lower tax liability. The reason is simple; any Health Savings Account contributions you make are deducted from your income before tax, which lowers your adjusted gross income. This means you have less income to tax when the IRS is taking a cut of their share.
The catch is also quite simple. You have to have a high-deductible plan to be able to allow for any Health Savings Account contributions. Single taxpayers with a health insurance play with a minimum $1,300 deductible and out-of-pocket costs of $6,450 (maximum), then you are allowed to contribute as much as $3,350 as a Health Savings Account contribution in any given year. Anyone who is 50 or older can contribute an additional $1,000 to their HSA. Additionally, if you are a family with a deductible of at least $2,600 and a maximum out-of-pocket expense of $12,900, you are permitted to make Health Savings Account contributions of up to $6,650.
When it comes to lowering your tax liability, many people wonder why they even bother with such contributions if they likely will not get what they are told they will get. The good news is that unlike many of the other tax perks that really are no longer perks once your income hits a certain level, this is a perk that does not go away. What we mean is this; no matter how much money you make, you are eligible to contribute the maximum to your HSA. The catch is that you have to meet the insurance plan requirements; there are no income requirements to meet for anyone in any tax bracket.
Furthermore, the amount of money you place into your HSA is flexible. The FSA is the one that is not flexible in that you cannot roll it over or do anything else with it if you choose not to use it throughout the year. The Health Savings Account contributions you make throughout the year are completely eligible to be left alone so that you can use them in the coming year. It provides a great advantage to anyone who might anticipate higher than usual medical bills in the coming year, such as a woman expecting a baby in the New Year.
Finally, there is one more piece of good news about the HSA; you can deduct any of your contributions through the date you file your income taxes. Let’s break it down a bit further. You do not have to make these contributions by December 31 to enjoy them on your 2015 income taxes. You can make them up to the day that you file your return and still claim them as a deduction.
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