5 Steps to Building Wealth for Retirement
Do you dream about having enough money to do whatever you want to do? Do you want to start a new business, provide financial help to family members or engage in a new hobby or adventure? Do you want more control over your time to do what is really important ...
Are You Planning to Retire Early?
Are you planning to retire early? The key factor for those who are planning an early retirement is to protect your retirement savings from another bear market. There’s been a lot of information published recently about the fact that many people close to retirement age have seen their retirement funds disappear ...
The Future of Social Security Retirement Benefits
There's been a lot of debate recently about the future of Social Security retirement benefits. Some say the Social Security system needs fixed. They argue that the current system is under funded and without a solution the Social Security Trust Fund will eventually be depleted. This is due, in part, ...Year End Tax Tips: Deductible HSA Contributions
If you have a high deductible health plan, you may also have a health savings account (HSA). HSA contributions are tax deductible on Form 1040 subject to the 2011 HSA contribution limits.
Health Savings Account (HSA)
As you may know, a health savings account (HSA) is a special account that you can establish in conjunction with a high deductible health plan. A health savings account isn’t required but there are certain tax benefits for having one. In addition to the tax benefits, a health savings account makes it easy to save money for future medical expenses. When the need arises, the money will be there to pay for out-of-pocket costs. It’s kind of like an emergency fund for medical expenses.
Contribution Limits
Like any other tax favored account, there are limits on how much you can contribute and deduct on your income taxes. The maximum HSA contribution depends on whether you have a high deductible health plan for yourself or your family. The 2011 HSA contribution limits for self only coverage is $3,050. The contribution limit for family coverage is $6,150. Tax Form 8889 is used to compute the HSA deduction which is reported on the first page of Form 1040.
Contribution Deadline
Like a traditional IRA, the contribution deadline for a health savings account is the same date that your income taxes are due. So the deadline for the 2011 tax year is April 17, 2012. In addition to the deductible HSA contributions, any unused funds can grow on a tax deferred basis until they are needed to pay for qualified medical expenses. Unlike a traditional IRA, funds withdrawn to pay for qualified medical expenses are tax free.
Year End Tax Tips: Charitable Donations
Here are three things you must do for a charitable contribution of cash or property to be tax deductible for the 2011 tax year.
Itemize Deductions
Obviously, you must itemize deductions. Gifts to charity are included on Schedule A of Form 1040. If you don’t itemize, it’s probably because the standard deduction for your filing status is higher than the itemized deductions.
For the 2011 tax year, the standard deduction is $5,800 for single or married filing separately, $11,600 for married filing jointly, and $8,500 for head of household.
Keep Appropriate Records
You must keep appropriate records of your donation to a qualifying charitable organization. A cancelled check, bank statement, or credit card statement can be used to substantiate gifts by check or credit card. In lieu of a bank record, you can obtain written verification from the charity. A written record from a qualifying charitable organization must show the name of the charity, date, and amount of the contribution.
Make Donations by December 31st
The last thing you have to do is make your donations of cash or property to qualifying charities by December 31st. To be deductible for the 2011 tax year, donations charged to your credit card by December 31st count as a deduction for 2011 even if you don’t pay the credit card bill until 2012.
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