Tax Deduction Tips

They say there are two things in life that are inevitable: death and taxes. While this is certainly true in our society, there are a few ways that you can avoid giving all of your hard earned cash to the government.

If you currently have a Health Savings Account and you are self-employed, you can use an “above-the-line” deduction to reduce your taxable income by the amount of your total contribution, up to the limits set in place for those contributions. If you have a Health Savings Account through your employer, any contributions made by your employer are taken out before your taxable income. If you make any contributions of your own, they can be taken out with an “above-the-line” deduction up to the total contribution limit.

In addition, any medical expenses you incur more than 7.5% of your adjusted gross income can be deducted from your taxes in a similar manner. The Internal Revenue Service defines medical expenses as any expense used to treat or prevent any mental or physical defect. This is a broad definition, for more details refer to the publication listed in the source of this article. While health, dental, and long-term care insurance premiums are deductible, any expense paid out of a health savings account or Archer medical savings account is not deductible.

While there are many expenses associated with your healthcare that are deductible from your taxes, consult a tax professional before filing your return.

Source

http://www.ustreas.gov/offices/public-affairs/hsa/faq_contributing.shtml

http://www.irs.gov/publications/p502/ar02.html