Financial Strategy
Financial Strategy
3. The HSA( Health Savings Account)
These plans are tax-favored savings accounts combined with a qualifying high-deductible health insurance plan. They allow taxpayers to deposit taxdeductible funds into a health savings account that can be used to cover medical costs. The contribution limit will change each year and is adjusted for inflation, but is generally similar to the IRA contribution amounts. You do not have to have a small business to set up an HSA, however you must have a qualifying high-deductible insurance policy.
Potential Tax Savings The business can write off 100 % of what is paid for the employee’ s health insurance plan and the employee can write off 100 % of what is placed in the Health Savings Account.
There are several key benefits of the Health Savings Accounts that I think are amazing. They are:
• You save money on your insurance premiums with the high-deductible insurance plan.
• The HSA contributions are fully deductible and not subject to the Schedule A medical phase out described above.
• If you don’ t use the money in the HSA by yearend, it carries forward for the rest of your life.
• You can pull out the money for qualifying health-care expenses tax free.
• If you don’ t want to use the funds for health care, you can pull out the funds like a traditional IRA and pay taxes after you turn 59 and a half years old.
• You can invest the money in essentially anything and grow the account tax-free.
• Finally, the HSA enables you to take control of your own health-care decisions because you are paying directly for your medical care out of your savings account.
Due to the fact that health care costs are rising every year and since the ability to deduct health care costs from income can result in large tax savings, it is important that a business owner take a serious look at how the business handles medical and health care costs of its owners and employees. This is just too large of an issue to simply ignore.
If you happen to be involved in a business without an active plan or if you happen to be the sole owner / operator of your business, and currently do not have a plan, we would recommend that you seriously consider the tax reduction benefits available to a business with a well thought out plan.
In future newsletters we will plan to discuss the tax savings options contained in the various available company sponsored retirement plans and most importantly we want to examine the“ wealth building” concepts that can allow you to legally reduce your tax burden while building an income stream for life and amassing great wealth.
As before, remember that we at Book Ease, Inc want to help you find the answers that are very difficult to locate elsewhere. Hopefully this will provide you with an unfair advantage over your competition. DCS
By Ross Brunson, President of Book Ease, Inc.
The information and opinions presented are for educational purposes only and are not intended as legal, investment or tax advice. No guarantees are made as to the accuracy of the information provided herein. Situations can change from day to day. Every individual, business person and / or investor should do their own due-diligence to determine which investments, legal and tax strategies are best for them.
You must assume the responsibility and liability for all decisions that you make on the basis of the information herein contained. Book Ease, Inc. makes no warranties, expressed or implied, as to the fitness and accuracy of the information provided or for the results obtained by using the information.
Those making investment, legal and tax decisions based on any of the information presented should do so in the knowledge that they could experience significant losses. In no event shall Book Ease, Inc. be liable for direct, indirect, or incidental damages resulting from the use of the information.
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