Every year individuals search for ways they can lower their tax obligation. With many people out of work and using their savings to survive, there just isn’t any room in the budget for paying large tax bills. There are several ways in which you can save money on those taxes which includes giving money to charity and purchasing a home. One way that a lot of people may not be aware of is that your health insurance premiums are also tax deductible. This is only true for a few circumstances so make sure you qualify before taking the deduction.
For those who are self-employed then you have the benefit of being able to deduct your health insurance premium from your taxes. This includes individuals who are in a partnership as well as employees who have 2% or more of stock in an S corporation. The amount you are able to take is based on your yearly income. Therefore, if you are reporting a loss from your self-employment then you cannot take the deduction. However, if you qualify then speak to a licensed agent at Insurance medics about the exact formula to use to calculate the amount you can subtract from your taxes.
If you are employed by a company that provides a cafeteria plan type of coverage which includes a health savings account (HSA) then the contributions you make to that account may be tax deductible. There are limits, $5,950 for a family and $3,000 for an individual, and you will need to speak to your human resource manager to make sure. This is because most of these HSA accounts are funded with pretax money and, therefore, have already been accounted for. The last thing you want to do is bring a tax audit down on your head because of a simple mistake regarding your health insurance premiums. (Be careful)
For everyone else who does not fit in either of these groups, the IRS does allow you to claim a tax deduction of medical costs. However, out of pocket expenses must be over 7.5% of your adjusted gross income in order to qualify. Fortunately, the health insurance premiums you pay do count towards this total amount. The best way to capitalize on this deduction is to keep careful record of what you have spent on your medical care during the year. If need be, work with a tax professional who can ensure that you get all the deductions you qualify for. A great savings tip is to opt for a high deductible health plan. For more information on HSA plans or health insurance premiums please call 866-396-9140.