Time to Find Tax Breaks . . . (Part II)
In the first part of this series, Time to Find Tax Breaks . . . (Part I), I discussed using a business entity to achieve tax breaks, now let's look at tax breaks available to employees through their benefits.
Employees have some tax breaks available to them, here are a few:
- 401(k) or 403(b) Plans-- These are retirement accounts that allow the employee to invest in their retirement and reduce their current taxable income now. The limits are $15,500 and $5,000 more if you are aged 50+. Many employers also match some part of employees' contributions. The money grows tax deferred, but eventually you need to pay tax on this money, typically in retirement
- Health and Dental Insurance-- Usually paid with pretax dollars-- a good tax break for something you need anyway
- Flexible Spending Accounts (FSA)-- Often overlooked, but a big tax break. These accounts allow you to pay co-pays, uncovered medical and dental costs, eyecare, eyeglasses, prescriptions, and some over-the-counter medicines with pre-tax dollars. Again, a big break, but be careful-- these are use it or lose it plans. Don't over estimate your costs. There are caps to this-- my company's is $7,500 (not sure if this is mandated by the IRS)
- Dependant Care Accounts-- Much like FSAs, but for child and adult care expenses
Always check to see if a benefit is pre-tax or after-tax. Pre-tax, always sweetens the deal . . .
In the next part of this series, I will discuss investments and other investment accounts that offer tax breaks . . .
Here are my related posts,
Posted by DDFD at 11/18/2008 10:04 PM 
Categories: Money Savers, Personal Finance, TAXES, Self Sufficiency
Tags: Money Savers Personal Finance Self Sufficiency Taxes
Categories: Money Savers, Personal Finance, TAXES, Self Sufficiency
Tags: Money Savers Personal Finance Self Sufficiency Taxes
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