How To Have More Money Left Over For Shopping!
The big discovery my husband and I made this year was Health Savings Accounts. As March rolled around and we had to begin the process of filing our taxes we discovered to our dismay that we owed a lot in taxes. After much number crunching on Turbo Tax we were able to find a number of new categories where we can save on taxes. One category was the SEP or Self Employeed Retirement Account. Another one was HSA or Health Savings Accounts. I will describe the second category in more detail.
We were not able to qualify for 2006, but we are able to qualify for 2007 onward. Any of the information I give below should be verified by an accountant or tax attorney. We have individual health insurance. We have over the years decided to keep health insurance policies with high deductibles. The reason for this is because we are healthy individuals and don’t go to the doctor much. When we do go to the doctor is is mainly for routine exams and tests. Our low deductible allows us to have low monthly premiums and spend the money we save from monthly premiums to purchase the best vitamins, visit the chiropractor, pay for gym memberships etc. This allows us to stay healthier because we focus on getting healthy and maintaining it rather than chasing symptoms. This brings me to the point I wanted to make, HSA’s.
What is an HSA? A HSA is a type of retirement account that you can set up at a number of banks or investment companies. You can have this HSA in addition to a traditional IRA or 401 K retirement account. Having another retirement savings account does not restrict you or limit you in any way from opening up a HSA account. From what I understand, the limit you can place in the HSA for 2007 for a family account is $4,500. For individuals it is lower, in the neighborhood of $2,000 to $2,500. The brilliant thing about HSA’s is that the money you place in the account you don’t pay income tax on. This will save us in 2007 around $2,000 in taxes. You can withdraw the money anytime in order to pay for medical expenses such as your chiropractor, your dentist, birthcontrol pills, viagra etc.
When you withdraw the money to pay for your medical expenses you don’t pay income taxes on it either. In fact when you turn 60 or so, you can withdraw the money tax-free to spend it on anything; Birkin Bags, Louis Vuitton belts, or that Ferrari you’ve always wanted, or better yet, travel to Italy.
I plan to invest the money in a house or apartment so that I can get passive income and live the rest of my retirement years in peaceful bliss. Please consult your tax attorney or accountant regarding the above information.
