The IRS has already announced the 2018 maximum contributions for Health Savings Accounts (Rev. Proc. 2017-37). It’s a good excuse to revisit the tax advantages of HSAs:
-You may deduct contributions to HSAs without having to itemize deductions.
-Withdrawals from HSAs are tax-free to the extent of amounts used to pay out-of-pocket qualified medical expenses incurred after the HSA is established – even if you could have taken funds out of your HSA to pay them in an earlier year, but didn’t.
-Earnings on undistributed funds in HSAs accumulate tax-free.
– HSA funds distributed after age 65 for non-medical expenses are taxed like traditional IRA distributions, but without the IRA required minimum distribution rules.
-There is no income phase-out for HSA deductions.
These features make the HSA a good tax savings device for qualified taxpayers. In order to be eligible to make an HSA contribution, you have to be covered under a “high deductible health plan,” and you have no non-permitted coverage. You can’t be enrolled in Medicare, and you can’t be claimed as a dependent on someone else’s return.
For 2018, a high deductible plan is one with an annual deductible of at least $1,350 for self-only coverage and $2,700 for family coverage. Maximum permitted annual out-of-pocket costs can’t exceed $6,650 for self-only coverage and $13,300 for family coverage.
The maximum contribution for taxpayers with self-only coverage is $3,450 for 2018. That compares to $3,400 for 2017. For family coverage, the maximum contribution is $6,900 in 2018, compared to the 2017 max of $6,750.
Related:
2017 HSA contribution Max $3,400 self-only, $6,750 family.
Laura Saunders, The Blind Spot in a Sharing Economy: Tax Collection, (via the TaxProf):
While some gig workers mean to cheat Uncle Sam, experts say others are bewildered by tax requirements that can be almost as complex for the owner of a microbusiness as for a much larger firm. Many know nothing about Schedule C (for a small business), payroll taxes and quarterly estimated payments. Often they’re unaware of valuable write-offs as well.
Like regulation, complexity favors the big.
Robert D. Flach, DON’T TOUCH THAT 401(K)! “This is a very expensive way to get money. A loan shark might be cheaper!”
Roger McEowen, Employer-Provided Meals and Lodging. “The IRS, at least in certain parts of the country, appears to have an audit program that examines farm and ranch corporations on the meals and lodging issue. In light of that, today’s post takes a look at the basic rules and what might cause concern for the IRS.”
TaxGrrrl, 7 Things To Do Right Now To Save On Taxes This Year
Jason Dinesen, What I Mean When I Say “Consult an Attorney” “I am shocked at the number of corporations I work with who have never talked to an attorney because ‘it’s a waste of money.'”
Jim Maule, Running Out of Sin Taxes. But sin, we still have plenty of that, including the sin Prof. Maule discusses: using other people’s money to upgrade your professional sports team.
Jack Townsend, Article on Justice Gorsuch’s Approach to Criminal Tax Cases. “The data set for the article is slim…”
Lew Taishoff, THE FACTS ARE EVERYTHING. “But I suggest we all, bloggers, litigants, attorneys, USTCPs, and even Judges, must ‘with a joyful mind, bear through life like a torch in flame’ the simple rule: The facts are everything.”
Kay Bell, Some sales of beneficial insects could be tax-free. Don’t tell the SLA.
John Buhl, Takeaways from Initial House Ways and Means Tax Reform Hearing (Tax Policy Blog):
To make tax reform permanent under these budget rules, policymakers will need to consider various base-broadening provisions that can offset revenue losses from rate reductions and full expensing. On the corporate tax side, this might mean eliminating the interest deduction and enacting a border adjustment.
As one panelist mentioned, businesses benefit from the interest deduction and might oppose getting rid of that tax break as a stand-alone, but stakeholders will need to look at any tax reform package in its entirety to truly judge its benefits. Limiting interest deductibility “may be necessary as part of a broader solution,” he concluded.
In addition, tax reform represents an opportunity to not only lower the tax burden, but also raise revenue more efficiently. Revenue-neutral tax reform can, in fact, be pro-growth.
The hard part is always to convince enough people of the advantages of lower rates and simplicity to overcome those who are privileged under the current system and will fight hard to keep their special breaks.
Annette Nellen, What’s simple about a postcard size tax return? “Gen Z filers might wonder what a postcard is.”
Leslie Book, Who Needs Netflix? Tax Videos on Demand (Procedurally Taxing). It’s not an advocacy of taxing videos on demand; it links to tax videos you can watch, including the cozy Fireside Chat with Inspectors General, Ombuds, and Advocates.
Richard Phillips, Tax Avoiding Companies Well Represented at Tax Reform Hearing (Tax Justice Blog). I’ll bet there were very few tax-seeking companies represented.
