Quick show of hands: Who out there loves paying taxes?
I love my country and all that it provides me, and I understand that tax dollars are what “pay the bills.” I don’t mind paying taxes… I just want to pay as few as possible, as legally as possible.
My guess is that most feel the same way… but many pay much more taxes than they need to be paying. The country provides lots of ways to save on taxes, but you have to “get in the game” to participate.
HSAs (Health Savings Accounts) and FSAs (Flexible Spending Accounts) are great ways many Americans can legally pay fewer taxes. Both can be funded with either pre-tax (FSA) or tax-deductible dollars (HSA) or both (HSA), and those dollars can be withdrawn tax-free to pay for qualified expenses.
My company has an HSA eligible health plan, and thus I can contribute to a health savings account. Last year, my son Harold needed braces. Those aren’t exactly cheap, but I was able to pay for them through my HSA. With the tax benefits, I figure we saved over $1,000.
If the Kenerly family has zero illnesses or injuries next year, we’ll spend at least $600 on qualified medical expenses (glasses/contacts/prescriptions/etc.). I guess I could pay for those with post-tax dollars and pay more than I have to….. but why would I??
Employee benefits and insurance coverages are complicated, and none of us are taught this stuff in school. But they play a huge role in all our lives, and it is important we understand how they work and how to use them. Figure out today if you are eligible to make FSA or HSA contributions this year, and what amount makes sense for you to contribute. It may save you lots of money, while also helping provide you and your family the safety and security you deserve.
That would be quite a benefit.
| Jay Kenerly, ChFC, AIF