OT: self-employment/HSA account
Life is good
Thread Starter
Join Date: Apr 2018
Posts: 4,036
OT: self-employment/HSA account
Ramping up my goals and I also have October slated for an open month of relaxation and healing.
Signs keep pushing me towards this, and towards setting a stronger framework for self-employment and having financial stability. Much of this was in the works a year ago and then very much directed by my Higher Power to put it on hold while dealing with my trauma issues.
Self-employment goals for this year include cash flow to cover:
1. State & Federal taxes
2. Monthly expenses
3. HSA account with maximum contributions
4. High deductible health insurance
5. Photography equipment
6. An office
Signs keep pushing me towards this, and towards setting a stronger framework for self-employment and having financial stability. Much of this was in the works a year ago and then very much directed by my Higher Power to put it on hold while dealing with my trauma issues.
Self-employment goals for this year include cash flow to cover:
1. State & Federal taxes
2. Monthly expenses
3. HSA account with maximum contributions
4. High deductible health insurance
5. Photography equipment
6. An office
Life is good
Thread Starter
Join Date: Apr 2018
Posts: 4,036
My husband and I had an Health Savings Account before and I'm looking forward to having one again.
USA info, from healthcare.com:
Self-Employed HSA: 9 Health Savings Account Benefits
HSAs are more than just a way to save for future healthcare expenses.
1. There Are No Contribution Minimums
When you set up an HSA, you do not have to commit to a certain contribution amount or frequency—great news for those with incomes that vary. Better yet, there is no minimum annual contribution.
However, there is an annual contribution limit set by the IRS each year. Recent limits were:
Individual-only coverage: $3,350Family coverage: $6,650
With a self-employed HSA, you’ll have the control to make uneven deposits throughout the year. You can make one deposit. You can elect not to make a deposit at all.
2. Friends and Family Can Contribute to Your HSA
If someone wants to give the gift of helping you pay for medical care, they can. Your HSA may be yours, but friends and relatives can deposit funds into it anytime.
3. HSA Contributions Are Tax-Deductible
When you are self-employed, you often want all the deductions you can get. An self-employed HSA gives you an opportunity to take another one. You can claim a tax deduction for contributions you or others make to your HSA, with the exception of an employer. Others cannot claim a tax deduction for their contributions to your HSA.
4. Interest Gained on an HSA Is Tax-Free
Unused funds sitting in an HSA earn interest, and the interest that accrues is tax free. That interest will compound over time and when you have an unexpected or major healthcare expense, you can withdraw the funds to help pay those medical bills. Yet another reason to hit your annual contribution limit each year and save, save, save.
5. Funds Used for Qualified Medical Expenses Are Not Taxed
You can use HSA funds to pay for healthcare, tax free. HSA distributions made for medical and dental items and services that qualify for the medical and dental expenses deduction are not taxed.
According to the IRS, qualified medical expenses may be incurred by:
You and your spouse
All dependents you claim on your tax return
Any person you could have claimed as a dependent on your return except that:
The person filed a joint return
The person had a gross income of $3,900 or more
You, or your spouse if filing jointly, could be claimed as a dependent on someone else’s return
IRS Publication 502, Medical and Dental Expenses provides information on what items and services qualify for the medical and dental expenses deduction.
6. HSA Accounts Are Portable
If you cease to be self-employed, you can keep your self-employed HSA. You can also keep it if you change jobs, stop working or switch to health insurance coverage that is not an HDHP.
The rule with an HSA is that you can use it as long as it has funds, but you may only contribute to it when it is paired with a high deductible health plan.
High deductible health plans, as defined by the IRS for calendar year 2015, have an annual deductible no less than:
$1,300 for self-only coverage; out-of-pocket expenses cannot exceed $6,450
$2,600 for family coverage; out-of-pocket expenses cannot exceed $12,900
Out-of-pocket expenses may include deductible, copayments, coinsurance and other amounts; they do not include premiums.
7. Account Dollars Roll Over Year After Year
The phrase “use it or lose it” does not apply to HSAs. You do not have to scramble at year’s end to find ways to use what you’ve set aside. An HSA is about savings. Again, interest will accrue on unused funds. It is to your advantage to let account dollars roll over. Ride it out through your healthy years and draw from it when the medical bills hit.
8. An HSA Can Be Used in Retirement
When you reach age 65 and enroll in Medicare, you can no longer contribute to your HSA. You may, however, continue using funds for qualified medical expenses. As a matter of fact, once you reach age 65, you can use your self-employed HSA however you wish; however, keep in mind it that funds used for anything other than qualified medical expenses will be taxed as income.
If you withdraw funds for anything other than qualified medical expenses before age 65 you will face a 20 percent penalty, plus taxes.
9. HSA Funds Can Be Invested
Depending on which self-employed HSA administrator you select, you may have options to invest HSA funds once your account reaches a minimum balance. This is another advantage to setting aside money in an HSA, especially when you are self-employed and entirely responsible for your own healthcare expenses and retirement savings. If you have few medical expenses in a given year and do not expect to rely heavily on HSA funds, it might be wise to select an HSA with investment options.
USA info, from healthcare.com:
Self-Employed HSA: 9 Health Savings Account Benefits
HSAs are more than just a way to save for future healthcare expenses.
1. There Are No Contribution Minimums
When you set up an HSA, you do not have to commit to a certain contribution amount or frequency—great news for those with incomes that vary. Better yet, there is no minimum annual contribution.
However, there is an annual contribution limit set by the IRS each year. Recent limits were:
Individual-only coverage: $3,350Family coverage: $6,650
With a self-employed HSA, you’ll have the control to make uneven deposits throughout the year. You can make one deposit. You can elect not to make a deposit at all.
2. Friends and Family Can Contribute to Your HSA
If someone wants to give the gift of helping you pay for medical care, they can. Your HSA may be yours, but friends and relatives can deposit funds into it anytime.
3. HSA Contributions Are Tax-Deductible
When you are self-employed, you often want all the deductions you can get. An self-employed HSA gives you an opportunity to take another one. You can claim a tax deduction for contributions you or others make to your HSA, with the exception of an employer. Others cannot claim a tax deduction for their contributions to your HSA.
4. Interest Gained on an HSA Is Tax-Free
Unused funds sitting in an HSA earn interest, and the interest that accrues is tax free. That interest will compound over time and when you have an unexpected or major healthcare expense, you can withdraw the funds to help pay those medical bills. Yet another reason to hit your annual contribution limit each year and save, save, save.
5. Funds Used for Qualified Medical Expenses Are Not Taxed
You can use HSA funds to pay for healthcare, tax free. HSA distributions made for medical and dental items and services that qualify for the medical and dental expenses deduction are not taxed.
According to the IRS, qualified medical expenses may be incurred by:
You and your spouse
All dependents you claim on your tax return
Any person you could have claimed as a dependent on your return except that:
The person filed a joint return
The person had a gross income of $3,900 or more
You, or your spouse if filing jointly, could be claimed as a dependent on someone else’s return
IRS Publication 502, Medical and Dental Expenses provides information on what items and services qualify for the medical and dental expenses deduction.
6. HSA Accounts Are Portable
If you cease to be self-employed, you can keep your self-employed HSA. You can also keep it if you change jobs, stop working or switch to health insurance coverage that is not an HDHP.
The rule with an HSA is that you can use it as long as it has funds, but you may only contribute to it when it is paired with a high deductible health plan.
High deductible health plans, as defined by the IRS for calendar year 2015, have an annual deductible no less than:
$1,300 for self-only coverage; out-of-pocket expenses cannot exceed $6,450
$2,600 for family coverage; out-of-pocket expenses cannot exceed $12,900
Out-of-pocket expenses may include deductible, copayments, coinsurance and other amounts; they do not include premiums.
7. Account Dollars Roll Over Year After Year
The phrase “use it or lose it” does not apply to HSAs. You do not have to scramble at year’s end to find ways to use what you’ve set aside. An HSA is about savings. Again, interest will accrue on unused funds. It is to your advantage to let account dollars roll over. Ride it out through your healthy years and draw from it when the medical bills hit.
8. An HSA Can Be Used in Retirement
When you reach age 65 and enroll in Medicare, you can no longer contribute to your HSA. You may, however, continue using funds for qualified medical expenses. As a matter of fact, once you reach age 65, you can use your self-employed HSA however you wish; however, keep in mind it that funds used for anything other than qualified medical expenses will be taxed as income.
If you withdraw funds for anything other than qualified medical expenses before age 65 you will face a 20 percent penalty, plus taxes.
9. HSA Funds Can Be Invested
Depending on which self-employed HSA administrator you select, you may have options to invest HSA funds once your account reaches a minimum balance. This is another advantage to setting aside money in an HSA, especially when you are self-employed and entirely responsible for your own healthcare expenses and retirement savings. If you have few medical expenses in a given year and do not expect to rely heavily on HSA funds, it might be wise to select an HSA with investment options.
Life is good
Thread Starter
Join Date: Apr 2018
Posts: 4,036
Open enrollment through Healthcare.gov starts Nov. 1 for 2019.
HSA contribution limits are pro-rated if insurance coverage is less than a full year. If I sign up and pay for coverage on November 1, it seems I'd be able to contribute $1141 to a family HSA (kid & I), from the pro-rated maximum 2018 limit of $6850 for families.
Does anyone have experience with this? I've been without health insurance for quite some time.
HSA contribution limits are pro-rated if insurance coverage is less than a full year. If I sign up and pay for coverage on November 1, it seems I'd be able to contribute $1141 to a family HSA (kid & I), from the pro-rated maximum 2018 limit of $6850 for families.
Does anyone have experience with this? I've been without health insurance for quite some time.
Forum Leader
Join Date: Dec 2008
Posts: 10,944
I'm afraid with my health issues, I have to have regular employer-provided health insurance. I have toyed with the idea of an HSA in the past, but I'm afraid I don't have that kind of self discipline to be successful!!
Member
Join Date: May 2010
Location: USA
Posts: 13,560
I went from a PPO to an HSA this year. With a child with some major health bills, this has bled me financially. Unfortunately, I did not have a choice in this. It stinks. If you are someone who only sees the doctor on occasion, it's fine.
Member
Join Date: Mar 2014
Posts: 685
>> Funds Used for Qualified Medical Expenses Are Not Taxed<<
This is true.
>>HSA Contributions Are Tax-Deductible<<
Yes, as an above-the-line adjustment to income. Thus it can reduce your income taxes. The contributions are *not* a deduction that will reduce self-employment tax.
As far as Federal and State taxes, just a real super ball-park minimum number to use - not knowing what state you're in - figure 20% of your *net* self-employment income will go to taxes. SE taxes alone are about 14%. The other 6% is a modest estimate for Federal and State income taxes.
Your income taxes could be zero if you're under certain thresholds. However as long as you have net income from self-employment of at least $400 you have will have a SE tax liability.
Talk to your tax adviser who really knows your financial picture.
I'm a CPA in California. Best of luck to you.
This is true.
>>HSA Contributions Are Tax-Deductible<<
Yes, as an above-the-line adjustment to income. Thus it can reduce your income taxes. The contributions are *not* a deduction that will reduce self-employment tax.
As far as Federal and State taxes, just a real super ball-park minimum number to use - not knowing what state you're in - figure 20% of your *net* self-employment income will go to taxes. SE taxes alone are about 14%. The other 6% is a modest estimate for Federal and State income taxes.
Your income taxes could be zero if you're under certain thresholds. However as long as you have net income from self-employment of at least $400 you have will have a SE tax liability.
Talk to your tax adviser who really knows your financial picture.
I'm a CPA in California. Best of luck to you.
Life is good
Thread Starter
Join Date: Apr 2018
Posts: 4,036
Thank you for those who've replied & are giving me good vibes with this!
I'm adulting today in new ways. Dee said something recently about "adulting" and "fun" in the same sentence, so I'm finding hope in that. There are some areas of adulting that are triggering me, so I'm recognizing that and facing my fears again today.
Quiet meditative time. Facing fears time. Kayak time. Life balance.
I'm adulting today in new ways. Dee said something recently about "adulting" and "fun" in the same sentence, so I'm finding hope in that. There are some areas of adulting that are triggering me, so I'm recognizing that and facing my fears again today.
Quiet meditative time. Facing fears time. Kayak time. Life balance.
Member
Join Date: Oct 2017
Posts: 497
We want from a regular plan to an HSA plan (not self employed). I put all the money that we would have paid for that higher insurance premium into the HSA (for awhile anyway). You have to build it up. When you get the bills and pay for prescriptions it's an eye ipening experience.
Life is good
Thread Starter
Join Date: Apr 2018
Posts: 4,036
I've found 4 possibilities for office space. I thought that would be last, yet it's coming up as a good place to start with as I meditate about this.
I like office space that feels bright, light, welcoming and comfortable. Great views would be wonderful.
#lifeisgood
I like office space that feels bright, light, welcoming and comfortable. Great views would be wonderful.
#lifeisgood
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