The Money Mustache Community
Learning, Sharing, and Teaching => Taxes => Topic started by: Pizzabrewer on July 26, 2017, 03:57:07 PM
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It's open enrollment season at my employer. They now offer a HSA-qualified health plan but make it pretty clear in the benefits booklet that it is up to the employee to set up and fund his/her own HSA account. I've been trying to call HR to verify that they will not do pre-tax withholding and auto-pay to an account I set up but it sure looks that way. The booklet lists transferring money from my checking account (after-tax obviously) to my HSA account as the method for funding it.
So how do I get the tax benefits of this? I see that it can be claimed on the 1040 but what about the FICA savings? I've been googling but can't find a good answer.
Any other considerations for funding with after-tax dollars when pre-tax isn't an option?
TIA for any help.
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So how do I get the tax benefits of this? I see that it can be claimed on the 1040 but what about the FICA savings? I've been googling but can't find a good answer.
You have it exactly correct.
You save at your marginal rate on federal taxes, but still pay FICA, the way your employer has set this up.
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Run the HSA through payroll to avoid income and FICA tax. Otherwise you pay FICA and only get an income tax deduction.
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Run the HSA through payroll to avoid income and FICA tax. Otherwise you pay FICA and only get an income tax deduction.
Good comment if directed to the employer. The employees may not have that choice.