At Aspyre Wealth Partners®, we partner with clients to help them live their best life! This means making incremental progress towards short term and also long-term goals like retirement. Annual funding of an Individual Retirement Account (IRA), a ROTH IRA, and/or a Health Savings Account can help you stay on track with your long-term goals. These are two easy tax saving tips people often overlook.
When preparing for your tax return this year, don’t forget that the deadline to make HSA (Health Savings Account) and IRA (both Traditional and Roth) contributions for 2021 is April 18, 2022. That means you may still be able to make contributions to these accounts, and it could reduce your taxes or increase your refund.
In this article we cover both potential tax savings tips. The first tip is HSA contributions. When you use an HSA, you get to use tax-free money to cover some or all of your healthcare costs. The second tip is getting in the habit of making annual IRA contributions if you are eligible and able to do so. Let’s look at both tips in more detail.
HSA CONTRIBUTIONS
Any individual who has participated in a Qualified High Deductible Health Plan (HDHP), that is HSA eligible in 2021, can contribute to an HSA. If you are not sure if your health insurance plan is HSA eligible, check with your employer or insurance provider.
For HSA accounts through an employer, the employee, the employer, or both can contribute in the same year. For an individual HSA, family members or any other person may also make contributions on behalf of the eligible individual. These contributions must be made in cash. Stock or property contributions are not allowed.
In 2021, the maximum contribution amount for an individual HDHP participant is $3,650 ($4,650 if you are age 55 or older). If you have family HDHP coverage, you can contribute up to $7,200 ($8,200 if you are age 55 or older). Remember, these limits include all contributions, including employer contributions. For more information, please visit irs.gov.
IRA CONTRIBUTIONS
For 2021, your total contributions to all your traditional and Roth IRAs cannot exceed $6,000 ($7,000 if you are age 50 or older) or your taxable compensation for the year, whichever is less. These limits do not apply to rollover contributions or qualified reservist repayments.
Roth IRA contributions may be limited based on your tax filing status and income. Your traditional IRA contributions may be tax-deductible; however, the deduction may be limited if you or your spouse is covered by a retirement plan at work and your income exceeds certain levels.
For questions about your HSA and/or IRA contributions, visit our website at aspyrewealth.com, or call (913) 345-1881.