With Kevin Martin, Senior Tax Advisor, H&R Block
Want to pay less in taxes but aren’t quite sure how? Or are you amongst the 63% of eligible Americans who are just giving money away to the government when you can keep it? Kevin Martin, a senior tax advisor at H&R Block shows us how we can all take advantage of various government tax breaks to reduce our 2015 tax burden.
As 2015 draws to a close, this is a good time to think about how you can take advantage of various government approved tax shelters such as health savings accounts (HSA) and flexible spending arrangements – but less than 37% of all eligible FSA savers use these legal shelters to reduce their tax burden, so use things like Open Enrollment to sign-up now and get a break on healthcare premiums.
Martin walks us through Flexible Spending Accounts – where you put in money for qualified medical expenses, up to $2,550 for 2015 – and can reduce your taxable income by the amount you put in. One down side of this account is that it’s a Use It or Lose It – where the balance cannot be rolled over into the next year – so perhaps that’s why so many people don’t use it, especially younger folks, and why seniors with annual medical expenses are better positioned to take advantage of this.
There’s also an HSA or Health Savings Account which let’s you contribute money towards healthcare expenditures and invest the money you put into this account – without the dreaded Use It or Lose It feature. Moreover, the growth in that account is also tax-free, as long as the money’s used to pay for qualified healthcare expenses. If you take the money out, you pay taxes and pay a 20% penalty. So tune in to find out how you can pay less in taxes.