3 Ways Health Savings Accounts Save You Taxes
Most people who are thinking ahead about their finances spend the most time looking at the various retirement plan options that are available. That's natural, because there are so many different options to choose from, and which one you pick can make a huge difference not only to how much you'll be able to save over the course of your career but also how much you'll owe in taxes when you take the money out of your accounts after you retire.
However, there's one type of tax-favored account that doesn't get nearly as much attention as the many different kinds of retirement accounts out there. Health savings accounts aren't used nearly as much as retirement accounts, because you have to have a qualifying high deductible health plan in order to use them. However, if an HSA is available to you, then it's worth you while to take a closer look -- because HSAs have a triple tax-free advantage that you'll have trouble finding anywhere else. Here, we'll look at the three ways that HSA contributions can save you on your taxes.
The most obvious benefit that HSA contributions give you is an upfront tax deduction for the amount that you contribute. For 2019, you can contribute up to $3,500 to an HSA if the associated high-deductible health plan covers only yourself, or $7,000 if you have family coverage. Those numbers are slated to go up to $3,550 and $7,100 respectively for 2020, and you can contribute an extra $1,000 if you're 55 or older.
Source Fool.com
