In order to be eligible to contribute the full allowable amount for 2018 to an HSA, you need to be covered under a high deductible health plan on the first day of the last-month of your tax year. This is December 1 for most taxpayers. You cannot be enrolled in Medicare or claimed as a dependent, and cannot hold other types of additional health-care coverage options in order to be eligible for an HSA.
If you were eligible for the entire year, individuals can choose to save up to $3,450 in an HSA and a family can contribute up to $6,900 for 2018. Those over age 55 can contribute an additional $1,000, for a total of $4,450 for an individual and up to $7,900 away per family.
In some cases, your employer might have made a contribution to an HSA on your behalf. Therefore, if you are contributing to an HSA, make sure you take into account anything your employer put in on your behalf. HSAs are portable, so you can move the account to another HSA. Furthermore, the money does not go away if you don’t use it in the year as is the case with some flexible spending accounts (FSAs). You can fund your HSA for 2018 up until your tax return date of April 15, 2019 and still fully deduct the contribution. So, if you qualify for an HSA for 2018, consider funding your HSA to lower your tax bill and set aside funds for future medical expenses.
2. Fund an IRA for 2018: Similar to HSAs, you can fund an individual retirement account for 2018 up until you file your tax return on April 15. To fund an IRA, you need to be under the age of 70½ and have earnings from employment at least equal to your IRA contribution amount. For 2018, you can fund an IRA with up to $5,500. For people over age 50, you can add an additional contribution of $1,000. Furthermore, if one spouse is working and the other is not, the working spouse can make a spousal contribution to the non-working spouse’s IRA. As such, a couple can put away $11,000 a year into traditional IRAs and, if both have reached age 50, they can put away $13,000 for 2018.
Contributions to a traditional IRA could be deductible or non-deductible. The deduction may be limited if you, or your spouse, is an active participant in an employer-sponsored retirement plan, such as a 401(k). If you have Modified Adjusted Gross Income of $63,000 or less as a single filer, or $101,000 or less as a married filing jointly active participant in a qualified plan, you can deduct up to the full amount for 2018. For single filers, the deduction is phased out from $63,000 to $73,000 and for married filing jointly it is phased out from $101,000 to $121,000.
Be the first to comment