If you’re looking for some huge tax savings for 2014, you only have a few months left to get in on the action!
In order to make a contribution to a health savings account (HSA) and claim it on your 2014 tax return, your HSA-qualified health plan must be in place no later than December 1, 2014. For those of you who already have a health savings account, you’ll want to be sure to maximize your contributions.
The maximum contribution limit for an individual for 2014 is $3,300, and for a family, $6,550. Individuals 55 and older can contribute an additional $1,000 per year. You can make contributions all the way up until April 15, 2015. Your contribution is claimed on page one of your tax return and is an above-the line tax deduction, which directly lowers your adjusted gross income, and therefore your taxes!
Tax Benefits of Maximizing HSA Contributions
You’ve read in many of my blogs how HSA contributions allow you to pay for medical expenses with tax-free dollars and allow you to take control of your medical spending. But do you know just how much you can save in taxes?
Larry is a computer IT specialist in Colorado and falls into the 28 percent federal tax category and 5 percent state. If Larry fully funds his HSA for 2014 ($3,300), he’ll save as much as $1,089 in taxes this year!
Megan on the other hand, has a family HSA. If Megan fully funds the family HSA for 2014 ($6,550), her family will save as much as $2,161.50 in taxes for 2014.
When to Sign Up for an HSA-Qualified Health Plan
If you qualify for a special enrollment period, you can sign up now for an HSA-qualified health plan. Applications submitted by the 15th of the month will have a policy effective date of the 1st of the following month, so you must apply no later than November 15, 2014, to meet the December 1 deadline to have your HSA-qualified health plan in place to make a contribution for 2014.
If you don’t qualify for a special enrollment period, you can sign up during this year’s open enrollment period which begins November 15, 2014; however, your policy won’t become effective until January 1, 2015, so you won’t be able to make a contribution for 2014 but you’ll be all set for 2015!
If you have any questions about HSA-qualified health plans or health savings account, contact your advisor or call us directly at 866-749-2039. Remember – your HSA-qualified health plan must be in place no later than December 1, 2014 to claim HSA contributions on your 2014 tax return.
Do you have any questions about health savings account or contributions? We would like to hear from you about how your HSA has saved you money!
Wiley Long is President of HSA for America, and a passionate advocate for consumer-based solutions that will improve price transparency and lower health insurance and medical costs for people purchasing individual and family health insurance plans.