It is that time of year again when our tax returns are due to be filed with the IRS. For many, they simply can’t wait because receiving a tax refund is a certainty and that usually represents extra funds for the kids, shopping, or perhaps a sorely needed vacation. Many taxpayers rush off to the nearest tax preparation chain and file as quickly as possible. Some filers even take advances against tax refunds, in spite of those tax refunds arriving in only a couple more days or weeks. Many taxpayers live paycheck-to-paycheck and have little interest in tax tips. In their haste to receive refunds, many don’t consider ways to lower their income or increase their tax refunds. This is due mainly to the bulk of their refunds coming from tax credits as opposed to the return of tax dollars due to over withholding.
For those of us who would like to increase our tax refunds, or perhaps lower our tax bill, here are some tips to consider for your 2016 and 2017 tax returns.
Health Savings Account (HSA) Contributions
A health savings account is a tax-advantaged medical savings account for taxpayers in the United States who are enrolled in a high-deductible health plan (HDHP). The HSA allows the taxpayer to put aside money for medical costs prior to being taxed. For an individual, the HDHP must have an annual deductible of at least $1,300 and require that annual out-of-pocket expenses paid not exceed $6,550.