Tax Saving Ideas
Tip of the Month
Tax Saving Ideas
If you are self-employed, you can deduct 60% of your (and your familyâs) health insurance costs. The even better news is that this percentage is going up next year to 70% and then to 100% in 2003. Otherwise you would add your health insurance costs to all your other medical costs and then if that total exceeded 7.5% of adjusted gross income, take your expenses as itemized deductions. Itâs nice to spread good news once in a while.
Have you considered a Medical Savings Account (MSA)? A MSA provides a tax advantage for the self-employed and employees of small firms. It is set up in tandem with a high deductible health insurance policy. The MSA is designed to cover less costly health care expenditures and reduce your overall premium costs. The MSA funds are tax-free, if used to pay for medical expenses. A separate account must be set up and separate checks issued. But, depending on you and your familyâs medical needs, this could mean big savings for you, particularly if you want to use a health care practitioner outside of your health insurance policy.
For more information, see IRS instructions for Form 8853, Medical Savings Accounts and Long-Term Care Services and Contracts.
These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. Service2Client LLC is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact their CPA regarding the topics in these articles.