Year-End Planning Tip: Consider a Health Savings Account (HSA)
HSA’s allow you to pay medical expenses on a pretax basis. If you meet certain requirements for 2017, your HSA contribution can be up to $6,750 for family coverage and $3,400 for single coverage (plus an additional $1,000 if you’re 55 or older) and can be made regardless of your income level. These contributions are 100% tax deductible above-the-line, so you benefit even if you don’t itemize or are subject to high-income itemized deduction phase outs. You can then take tax-free withdrawals to pay uninsured medical expenses. Withdrawals not used for medical expenses are taxable and if taken before age 65 are subject to a 20% penalty tax. After age 65, withdrawals are taxed as ordinary income. In the meantime, they can build tax-free. It is also important to note that 2017 deductible HSA contributions can be contributed until April 15, 2018.
For more year-end tax tips for individuals please click here.
Davis & Hodgdon Associates CPAs has been assisting individuals and business owners with tax consulting and strategizing for more than 25 years. Please call us at (802) 878-1963 (Williston) or (802) 775-7132 (Rutland) if you have any questions or if you would like to set up a strategy meeting to discuss your unique tax planning needs prior to December 31.
Eric Baral, Associate Accountant, Davis & Hodgdon Associates CPAs