Keep Track of Mileage!

Although it’s critical for those with business mileage to keep careful track of each and every mile, it’s also handy for many to keep track of medical and charitable mileage as well.  This handy program can add several dollars to your itemized deductions with little effort on your part simply because you generally carry your phone with you when you travel!  The initial plan is free, but if you do a lot of driving for any of these activities, consider the upgrade and take the discount!

MileIQ is an automatic mileage tracker that takes the hassle out of keeping a mileage log. I think you’ll find it helpful for logging your business drives!

The MileIQ app runs in the background on your iOS or Android phone and logs every drive automatically. You swipe each drive to classify it as business or personal, and MileIQ calculates the value of your deductible mileage. You can add details like parking, tolls, purpose and vehicle and have a complete, accurate mileage log practically effortlessly! Your log gets synced to the cloud, so you can get to it any time, even years down the road. You’ll be able to claim the full value of your mileage deduction with total peace of mind.

This year, MileIQ is offering my clients a 20% discount on annual unlimited-drive plans. Subscriptions are regularly priced at $5.99/mo. or $59.99/yr. (Here’s how to redeem promo codes.)

You can try MileIQ by downloading the free app for iOS or Android. To get an annual unlimited-drive plan at a 20% discount, sign in to your MileIQ web dashboard, click “Get Unlimited Drives” and use promo code SSCH672A at checkout. (Note that the discount is not valid for in-app upgrades or monthly plans.)

Want more information? Take a look at this flyer.

I hope you’ll give MileIQ a try and let me know what you think. (And remember, the subscription is usually deductible too — at 53.5 cents for every business mile in 2017, it’ll pay for itself in just a few drives!)

Promo Code: SSCH672A

The Benefits of an HSA : Investing in an HSA has certain benefits over investing in other savings accounts

 

If you have a high-deductible health plan, or HDHP, are not enrolled in Medicare and are not someone’s dependent, you’re eligible for an HSA. Such an account has many benefits as a means to save for retirement.

In order for your health care to qualify as an HDHP you’ll need to be enrolled in a plan where you have to meet a high deductible of out-of-pocket expenses before insurance will cover medical-related costs.

“According to the IRS, those are plans with an annual deductible that is not less than $1,300 for self-only coverage or $2,600 for family coverage, and the annual out-of-pocket expenses (deductibles, copayments and other amounts, but not premiums) do not exceed $6,450 for self-only coverage or $12,900 for family coverage,” reported chief investment officer of Better Money Decisions Kate Stalter in a May 2016 article for U.S. News.

If you are financially able to enroll in an HDHP, there are benefits you can take advantage of in opening an HSA that you should consider.

Triple tax breaks – Unlike other savings vehicles, such as 401(k)s, IRAs and other interest-building accounts, HSAs have several advantages when it comes to taxable investments.

“Its first advantage is that contributions are tax-deductible, or if made through a payroll deduction, they are pretax. Second, the interest earned is tax-free. Third, account owners may make tax-free withdrawals for qualified medical expenses. Qualified expenses include most services provided by licensed health providers, as well as diagnostic devices and prescriptions,” explained Stalter.

The triple tax break afforded to HSA accounts makes them very desirable as a savings vehicle. Even traditional IRAs and 401(k)s have a tax on withdrawals, and funds within Roth IRAs are taxed upon contribution.

“There’s no other vehicle under the tax code that has the kind of preferential treatment that Health Savings Accounts have. But it’s a way for those who are not focused on tax shelter opportunities to put the money aside as well,” says senior vice president of Advisor Services at Manning & Napier Shelby George.

Ease of use – HSAs are traditionally meant to help individuals save money for future health care costs. As long as you’re 65 or older, you can withdraw funds from the account penalty free.

You can even use these funds for nonmedical expenses, but with a 20 percent income tax fee. Regardless of what the money is used for, it’s easy to access your funds.

“You can receive blank checks, a debit card or both [to easily take money out of the account]. The debit card may be used for online purchases,” explained Forbes contributor Sharon Waldrop in an August 2013 article.

Long-term savings – An HSA also has benefits that, when taken advantage of, can provide long-term savings as another route for retirement planning.

“With a Health Savings Account, the money stays with you even if you don’t spend all of it during the year. There is no pressure to ‘use it or lose it’ [as in a Flexible Spending Account], which encourages people to be wasteful and get [health care services] they may not need,” reports Director of Taxation at Maier Markey & Justic LLP Bernadette Schopfer.

Furthermore, Co-Owner and Principal of Alpha Financial Advisors Ann Reilly Gugle suggests allowing your HSA to grow tax-free and investing your money for long-term appreciation, rather than spending it on health care needs as they occur.

“In this sense, the HSA resembles a Roth IRA, in that it grows tax free, but you also get the benefit of a current deduction” that Roth IRAs do not, she says.

Especially if you’re already maxing out your 401(k) and IRA plans, you should consider investing in an HSA to build as much capital as you can for retirement.

—This was an excerpt from an article on the Extra Credit Union website Sept 2016

 

Health Insurance Deduction for Self Employed

Those that are self employed (File a Sch C on their Federal 1040) are entitled to claim a deduction for the cost of the health insurance paid that has some tax advantages over other tax payers.  It is called an “above the line” tax deduction because the deduction occurs on the front page of the tax return and therefor reduces taxable income dollar for dollar.

Health insurance premiums that qualify include:

• Long-term care Insurance premiums (up to the age-based maximum)
• ACA marketplace premiums net of the advance premium tax credit (APTC)
• Payback of any portions of the APTC in the year of the APTC
• Employee costs for employer group coverage
• Medicare parts B, C and D premiums
• Medicare supplemental plan premiums
• Dental insurance premiums
• Vision insurance premiums
• Lost or damaged contact lens premiums

Premiums can include those that cover the taxpayer as well as the taxpayer’s family.  However, if the self employed individual is able to participate in a subsidized (over 50% of the costs covered) plan for any month, then the costs for that month are excluded.  Any expenses disallowed due to income limitations can be utilized on Sch A.

 

 

Proposed Changes to Medicaid Expansion in Ohio — The Henry J. Kaiser Family Foundation

This fact sheet describes Ohio’s proposed changes to their Medicaid expansion included in the Healthy Ohio Program Section 1115 demonstration waiver application the state submitted to CMS on June 15, 2016.

via Proposed Changes to Medicaid Expansion in Ohio — The Henry J. Kaiser Family Foundation

What to Know Before Investing in a Health Savings Account

 Better understanding your personal health financial plans

Health savings accounts, or HSA’s, are a very common piece of high deductible policies that many Americans already have in their current health insurance. However, it is one of the least understood elements of personal financial plans and therein lies the problem.

First, let’s review the basics of a health savings account. According to the website, http://hsacenter.com, an HSA “combines high deductible health insurance with a tax-favored savings account.”

The money in this account can be used by you to assist in paying your deductibles when visiting doctor’s offices or hospitals and the insurance picks up the difference once the deductible is met. The unused money in the account collects interest as with any other savings account and is yours to keep.

It’s important to note that the money in the account can only be used to help pay medical expenses and is not available to use on every day expenses. If you withdraw money to pay for non-qualified medical expenses, you will be taxed at your personal income tax rate, plus 20 percent if you’re under the age of 65.

Some of the things an HSA can be used for are:

• Health insurance premiums when you’re between jobs.
• Qualified long-term care premiums.
• Medicare premiums and out of pocket expenses.
• Living expenses after age 65 such as ordinary income taxes.

Some of the advantages of an HSA are:

• You decide how much money to put into the account.
• It’s 100 percent tax-deductible (up to the legal limit).
• Tax-free withdrawals to pay for qualified medical expenses (including dental and vision).
• Tax-deferred interest earnings.
• HSA money is yours.  An HSA, unlike a flexible spending account (FSA), doesn’t forfeit your money at the end of the year; it’s yours to keep.
• Having an HSA does not impact your ability to have an IRA.

With anything, there are potential disadvantages as well. Life is unpredictable, and a health savings account can only help you as long as there is money to pull from, so budgeting is very important to ensure funds are there when a medical emergency arises. As mentioned on the website mayoclinic.com, information about the accounts can be different wherever you look so be sure to do thorough research about your plan and the company offering it. HSA’s can be seen as mostly beneficial to a younger subscriber as older, sicker people may not have the money to put aside into the account. If you do take money out of the account for non-medical expenses, you will have to pay taxes on it.

You might be wondering why it only comes with high deductible insurance. According to the website http://hsacenter.com, “the law requires that the savings account be combined with a qualified high deductible health insurance plan which can cost less than other health insurance plans.” In 2014, the typical minimum annual deductible for an individual qualified HSA plan was $1,250 and $2,500 for a qualified family plan.

According to high deductible health insurance plans, once you meet the year’s deductible, your health insurance begins paying the remaining coverage expenses in accordance with your plan’s conditions. Some plans may even pay 100 percent of covered expenses after the year’s deductible is met.

In order to qualify for an HSA, you must be covered by a qualified high deductible health insurance plan, not covered under any other health insurance, not enrolled in any Medicare and not a dependent.

The Internal Revenue Code Section 213(d) specifies that qualified medical expenses deal primarily with alleviating or preventing physical and mental illness, which can include dental and vision. Things that don’t qualify include, but are not limited to, cosmetic surgery, health club memberships, maternity clothing and household necessities such as toothpaste. Generally speaking, HSA money cannot be used to pay insurance premiums, though there are some exceptions.

If you want to compare the cost of your health insurance to an HSA plan, estimate your potential tax savings, or calculate how much you would save over time with an HSA, visit http://hsacenter.com and click on their “HSA calculators” link in the menu bar.

When talking to healthcare providers about an HSA, be sure to ask about minimum balances, penalties and other such fees and, as with any account, be diligent in managing it to ensure a positive outcome.

Deductible Job Hunting Expenses

If you are one of the MANY looking for work, some of your job seeking expenses could be deductible on your tax return. 

Expenses of looking for a new job, that is in your current line of work, are deductible on Sch A of the tax return, unfortunately subject to 2% of the tax return AGI.  So you have to be able to itemize, but you don’t necessarily have to be successful in your search to find a new job.

You can’t, however, deduct the costs of looking for work  in a NEW field of work.

•  Payments to recruiters, headhunters, employment agencies, necessary advertising costs for employment in current field
• Cost of printing, mailing resumes
• Cost of putting together a portfolio
• Fees paid for advise (legal or tax) concerning employment contracts
• Long distance phone call costs to possible employers
• Transportation costs to interviews.  If you drive, actual expenses or standard mileage rate.  Keep track of mileage either way.
• Any newspapers or publications purchased for employment ads
• 50% of meals and entertainment cost specifically related to job searches
• Meals, lodging, local transportation for out-of-town travel that is related to job searches.  The trip must be primarily for the purpose of the job search.  If your main purpose is personal, you can still deduct specific job hunting expenses at the destination, but the travel costs will not be deductible.

Getting Familiar with the Long Term Care Insurance Cost

Another consideration is that the cost of long term care insurance is a tax deduction for those that can itemize on their federal tax return. Many states also allow for medical deduction even if the taxpayer is not able to utilize those expenses on the federal tax return. For those that pay long term care insurance premiums, it would be wise to bring the cost figures along with other tax documents when going to the yearly tax preparation appointment.

longtermhealth

photo credit: http://www.adrtoolbox.com/

Being in the know of the long term care insurance cost would be helpful when thinking about plans for you and your family’s future and ensuring issues, especially regarding financial matters. Keeping in mid the possibilities that could happen in one’s life, it would be reasonable if you are already looking for the possible long term care insurances and their costs available near your place. Most people needing long term care could actually have it at home which they usually prefer, since the nursing homes are primarily for people who have illnesses more severe that they really need to be attended to most of the time.

Though long term care insurance policies cover the expenses of the long term care, it is still up to you where you prefer to have the long term care, which would adjust with the other conditions and terms of the policy…

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Is Long Term Care Insurance Taxable?

Long Term Care Insurance can be a wonderful thing. Ask anyone who knows about how expensive retirement homes can be. In general, the elderly can expect to need 1-3 years of care either in-home or at some type of extended care facility. How these insurance policies pay out can determine if they are taxable, or not.

Policies that merely reimburse for expenses paid are NOT taxable.

Those policies that pay out on a per diem basis (so much per day) COULD BE taxable. To determine if the amount received is taxable, IRS Form 8853 will have to be filled out with the tax return. Generally you will have taxable income only if the amount of your actual expenses is less than your reimbursement amount. You are required to included your expenses, days of care, and your reimbursement on IRS Form 8853.

Do You Qualify for a Government Subsidy for Your Health Care Premiums?

This website provides a handy chart which indicates by income and the number of people in the household if you might qualify to save on your health insurance coverage through the government website. Don’t forget, March 31st is the last day to sign up for health coverage through the government site without penalties for 2014.

https://www.healthcare.gov/how-can-i-save-money-on-marketplace-coverage-chart/

Writing Off Your Home Office

Those that are self-employed and have their only office in the home, or are employees who have an office in the home for the convenience of their employer, can write off some of their home expenses on their tax return by allocating costs and depreciation on business use and square footage.

This year the government has given those individuals a simpler option. Instead of using Form 8829 to allocate those costs, there is an option which allows for a float $5.00 per square foot (up to 300 sq. feet) of the home used regularly and exclusively for business. The maximum write off would be $1500 under this method. In addition, those who use the simplified method can still use all the allowable mortgage interest and real estates on Sch. A, even what was normally allocated to business use.

Since it involves less record keeping, many people in this situation may prefer to use the simplified method if keeping all those heating bills etc. seemed to be too much effort.