End of Year Deductions for Medical and Retirement
December 31 is quickly approaching, and you are maybe wondering how to handle your retirement accounts and medical coverage/plans from a tax perspective. By taking action before the end of the year, you could save yourself lots of money. We’ll show you the proper techniques you can use right now before time runs out.
Six money-saving tax strategies
Strategy #1: Establish your 2019 retirement plan before the end of this year. Be sure to contribute to your policy before then.
Strategy #2: Convert to a Roth IRA. The long-term savings here can be huge. Make sure to leave the converted funds in your Roth for at least five years.
Strategy #3: Reimburse your 2019 Section 105 or other health reimbursement account (HRA) medical expenses right now. If you have a Section 105 plan in place, and you haven’t been reimbursing costs monthly, do a reimbursement now to get your 2019 deductions. Then put yourself on a monthly reimbursement schedule in 2020.
Strategy #4: Implement a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) or an Individual Coverage Health Reimbursement Arrangement (ICHRA). If you haven’t yet put a QSEHRA in place and you plan to do so on January 1, do that right now and expose yourself to that possible $50-per-employee penalty. Alternately, consider implementing an ICHRA in 2020.
Strategy #5: Ensure that you take your S corporation health insurance deduction correctly. Do you operate your business as an S corporation and want an above-the-line tax deduction to cover the cost of your health insurance? Then you need the S corporation to (a) pay for or reimburse you for the health insurance and (b) put it on your W-2. Make sure that the reimbursement happens before December 31 and that you have the compensation set up to show on the W-2.
Strategy #6: Claim the tax credit for the health insurance you give your employees. If you provide your employees with group health insurance, see whether your pay-structure and your number of employees put you in a position to claim a 50% tax credit.
Interested in learning more in further detail, contact Meese Khan, LLP.
Phone: 623 935 1005