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While most people are familiar with tax benefits for other types of investments, often times, they are less familiar when it comes to the tax benefits of health savings accounts. There are three such benefits that you should know about and take advantage of.
The second tax benefit comes on the interest side. Health savings accounts, do earn interest, and this interest is tax free. This allows an individual to use the account for long-term appreciation as the money does grows tax free. In that regard, it is very much like a Roth IRA with the added benefit of a current tax deduction.
The third tax benefit is that the owner of the account has the option of taking tax free withdrawals for medical expenses. These expenses must quality, but they do include almost all services provided by licensed health providers as well as substance abuse treatment and prescriptions.
Currently, in 2015, an individual can contribute up to $3,350 and a family can contribute up to $6,650. For those over the age of 55, an extra $1,000 contribution per year is allowed.
Finally, it is important to note that health savings accounts do not have a limit on carry-overs or a requirement on when the funds must be used. This is what enables them to be used for long-term savings to offset increased health-care costs or additional costs after retirement.
While health savings accounts haven’t always been on the forefront of investment options, with health insurance policy’s current rising deductibles and out-of-pocket expenses, more individuals are qualifying for the accounts, and with the tax benefits, it’s wise to give them a look.
If you are tired of overpaying taxes, call 212-631-0320 and ask for Mark Feinsot.
Feinsot CPA is a licensed New York City CPA Firm with offices on 57th Street and 32nd Street to service clients throughout Midtown Manhattan. Our practice services businesses and individuals. For additional expertise, we have concentrations in Law Firm Accounting, Aviation Accounting, Dental Practice Accounting and High Net Worth Accounting and Tax.