The IRS Deductions Blog

Archive for March, 2008

Question: Bullshit about pre-tax healthcare spending?

I think it’s such bullshit that I can’t set up a pre-tax healthcare spending account as an individual, just because my employer doesn’t offer it and I don’t have a High Deductible Health Plan. Does anyone know any alternatives to this? I pay thousands out of my net pay year in and year out, and will for life, for treatment not covered by my insurance. FU BCBS!
I know BCBS doesn’t make IRS regulations, I’m not an idiot thanks. It’s just that I have NEVER had health insurance to cover this particular joint problem, yet every other joint in the body is covered for most treatments and surgery. Ridiculous. America is the richest most powerful country on earth, and the dumbest. Who’s idea was it that health care of all things should be privatized? Decisions on a person’s health should not be made by a profit-driven entity.

Answer: The federal government set up the rules for the Health Savings Accounts. Not BCBS.

In order to qualify for a HSA – you have to participate in a high deductible health plan. Usually that means a deductible of 1000 (for individual) or higher.

Personally, I’m glad I don’t qualify for a HSA. My 500 individual deductible stinks enough. I’d really hate to have a 1000 ded each year.

However, your employer may offer a Flexible Spending Account.

It is similar to an HSA -only any money not used in it at the end of the year goes to the Flex company. You lose it. (With an HSA, the money can roll over from year to year).

I set my Flex to take out enough money to cover my deductible each year. I know I’ll usually use close to that. And, if you are reaching the end of the year and still have money in the account….go load up on Zyrtec and other over the counter medications that you use regularly and submit those receipts to get your money back.

A Flex account will cover non-covered treatment and is funded with pretax dollars also.

Check with your employer to see if they offer a Flexible Spending Account.

Also, if your medical expenses exceed 7% of your income, you can deduct the amount over 7% from your taxes. You can check the irs web site for more info on that.

Items on Amazon Right Now for High Deductible Healthcare Plans:

The Medicare Advantage Piece of the Healthcare Debate

Insurers constantly caution seniors that their Medicare Advantage perks such as hearing aids, dental payments and even gym memberships will fizzle if Democrats get their way and cut government subsidies for them. However, tens of billions of Medicare dollars funneled through insurers also pay for extras that never reach beneficiaries.

High Deductible Health Insurance for Florida

Question: What is the best health insurance plan for an individual and what does it all mean?

I’m 27 and looking for affordable health insurance just for myself. I don’t know what all the terminology means like PPO and deductibles, etc. Also, I have a history of sinus problems and am looking to get covered in case I need surgery. Preferrably, I’d like small doctor visit charges, drugs covered, and major things like hospital stays/surgery to be 100% covered. Any thoughts I would really appreciate! Thanks!

Answer: healthplans.my-age.net – my family have this health insurance. It is affordable and has good coverage for dental issues.

Items on Amazon Right Now for What Does 100 Deductible Mean:

Letters to the Editor for Wednesday, Dec. 23, 2009

To the Editor:

Jessica Lerner- Miracle Official Music Video

Question: If I do file jointly for taxes, and my wife goes back to school (MBA), is it deductible?

Answer: Even better yet, they shouldn’t answer your question unless they are a tax professional.

The Lifetime Learning Tax Credit can be claimed for students in any year of study, which makes it appropriate for a lot of graduate students.

You can claim this credit for yourself, your spouse or your dependents. The credit is calculated by summing your tuition and related expenses, those of your spouse and those of all your dependents.

The amount of the lifetime learning credit is 20% of the first $10,000 of qualified education expenses you paid for all eligible students. The maximum amount of lifetime learning credit you can claim for 2005 is $2,000 (20% × $10,000). However, that amount may be reduced based on your modified adjusted gross income (MAGI).

Also, there is the Student Loan Interest deduction. if your modified adjusted gross income is less than $135,000 if filing a joint return, there is a special deduction allowed for paying interest on a student loan (also known as an education loan) used for higher education. For most taxpayers, MAGI is the adjusted gross income as figured on their federal income tax return before subtracting any deduction for student loan interest. This deduction can reduce the amount of your income subject to tax by up to $2,500 in 2005. The numbers arent in for 2006, but either it will be the same, or a little higher.

Items on Amazon Right Now for Mba Tax Deductible:

The National Association of Professional Women’s Local Chapter in Jacksonville Has Successful Chapter Meeting Kicking …

Chapter President, Karem Mieses welcomed all members and guests and reviewed the Chapters goals to foster friendships, serve as a resource for ideas and support in our professional and personal lives.

Question: Am I better off paying off a student loan or put the $ in a savings acount.?

I would get 4% dividend in the savings account and my interest on my student loan is 8.5% with about a 3800 balance. The Interest from the student loan is tax deductible!

Answer: You are better off paying off your student loan. You end up paying more in interest on the loan then you would earn in your savings account. Using the numbers you provided you could earn about $155 in interest if you put the money in your savings account, but you would end up paying $165 in interest on the loan.

Items on Amazon Right Now for Tax Deductible Savings Account:

Crossroads House is seeking funds to support its mission

Editor’s note: Officials of Crossroads House of Watertown have prepared the following article in an effort to focus its need for additional financial support for its mission.

Find out about a tax free savings account for education!

Question: What are the rules regarding Health Savings Accounts?

I started a new job back in Aug. 2006. My employer offers a group health insurance plan but it is not a very good one and has a high deductible. The company dropped the ball in getting me signed up for the plan in time and now their not so good plan isn’t even going to cover a pre-existing condition. I talked to the boss and came to an agreement that in lieu of being covered under their plan they would just contribute $130 monthly (the same amount they would pay to put me on their plan) to a Health Savings Account that I could use to pay medical expenses. He came back and said that he could not make good on the agreement because he was told I had to have some type of insurance coverage to contribut to an HSA. He also said that the max I (or the company on my behalf) could contribute to one of these type accounts is $1100 annually. Which is $460 less than what we agreed upon. Can anyone explain the rules of HSA’s to me and what other options I might consider to work this out?

Answer: An individual can set up an HSA for himself or his family. An employer can add an Health Savings Account option to the so-called cafeteria benefit plan it may already offer.

The money put into the plan is before taxes, including Social Security, if part of an employer plan. Otherwise it is a above-the-line deduction, meaning you don’t have to itemize your deductions to get the tax break and that the deduction is not subject to the phase-out rules that make many Itemized Deductions unavailable to high wage earners.

The Health Savings Account is set up like an IRA. A trustee approved by the IRS must be used. Money put in the plan grows tax free and funds withdrawn for qualified medical expenses are also tax free. Unlike the older Flexible Savings Accounts offered in employer cafeteria plans, you don’t have to spend the money put into the account by year end or otherwise lose whatever’s left. Money can be rolled over from year to year. This can allow for a nice chunk of money to accumulate that can be withdraw tax free at age 65.

In order to qualify for a Health Savings Account, the individual or family must purchase a high deducible health insurance policy. These are special policies that have a Minimum Deductible of $1000 to a maximum of $5000 for an individual and $2000 to $10,000 for a family. The higher the deductible, the lower the premium.

Individuals can contribute and deduct the lesser of $2250 or the deductible on the policy: for married couples or families it is double that. If over 55, the contribution and deduction is $600 higher for individuals and $1200 higher for couples and will continue to rise at $100 a year until 2009, where it will be capped at $1000 for individuals and $2000 for families or couples.

The money in the Health Savings Account cannot be used to pay the premiums for this policy except in certain circumstances (basically when you’re unemployed). It is meant to meet the deductible on the policy, co-pays, drug costs, eyeglasses or any other medical expense that could be itemized on an individual tax return as a medical expense.

Money used to pay qualified medical costs is withdrawn tax free. Money withdrawn in excess of qualified medical expenses is taxed as income and subject to a 10% penalty, unless the owner is disabled or over 65. Any money in the account at death is added to the taxable estate.

There are no income limits on Health Savings Accounts. If started early, when you are still young and healthy, a substantial amount of money could accumulate to either meet higher medical costs as you get older or to use to supplement your income in retirement.

Items on Amazon Right Now for High Deductible Health Plan Rules:

Databases coming soon

April fifteenth is the last day for Ohioans to file taxes. But it’s also the date when Ohioans can get access to new interactive, online databases for three thousand local governments throughout the buckeye state. Statehouse Correspondent’s Jo Ingles has details. WKSU’s Jo Ingles reports.

CommonHealth – Germ Warfare