Tax Saving Ideas
For next year’s return – if you have money coming back to you - consider direct deposit. This may save you considerable time in getting your refund back. It also eliminates the possibility of your refund getting lost in the mail or pilfered. It also saves your tax dollars because it costs a lot less than having to print a check, put in an envelope, put postage on it, and put it in a mailbox -- you get the idea. There’s only one drawback: you will have to monitor your account to see when it shows up.
If you are self-employed, you can deduct 60% of your (and your family’s) health insurance costs. The even better news is that this percentage is going up next year to 70% and then to 100% in 2003. Otherwise you would add your health insurance costs to all your other medical costs and then if that total exceeded 7.5% of adjusted gross income, take your expenses as itemized deductions. It’s nice to spread good news once in a while.
Have you considered a Medical Savings Account (MSA)? A MSA provides a tax advantage for the self-employed and employees of small firms. It is set up in tandem with a high deductible health insurance policy. The MSA is designed to cover less costly health care expenditures and reduce your overall premium costs. The MSA funds are tax-free, if used to pay for medical expenses. A separate account must be set up and separate checks issued. But, depending on you and your family’s medical needs, this could mean big savings for you, particularly if you want to use a health care practitioner outside of your health insurance policy.
For more information, see IRS instructions for Form 8853, Medical Savings Accounts and Long-Term Care Services and Contracts.