3 Steps To Revisit Deductions In Your Workplace

Saturday, June 28, 2014, AM | Leave Comment

Too often, employees neglect to make the most of the tax-favored benefits their employers provide for them. Sometimes we just ignore certain benefits or make excuses to not take advantage of them. On the contrary, an employee should start these accounts at the very beginning of the year to take full advantage of.

tax-deductions

There are a variety of benefits in the workplace that your employers may give you so ask your Human Resources (HR) representative about these benefits.

I am sure we already know about these benefits. This is a reminder to open and contribute to these accounts:

  1. Health Savings Account (HSA)

    An HSA is a kind of savings account that you can use to pay medical or dependent-care expenses with pre-tax dollars. Talk to your HR Rep for a complete explanation of how to go about opening HSA account.

    Read more about it in IRS Publication 969 (2013), Health Savings Accounts and Other Tax-Favored Health Plans.

  2. 401(k) Savings Plan

    These tax-favored savings plans provide two benefits. 1) The amount you contribute is deducted from your taxable pay, so your income-tax bill is reduced, and 2) Investment returns earned are tax-deferred so your savings grow faster than they would in a taxable account.

    Read more about it in IRS 401(k) Plans.

  3. IRA

    You make IRA contributions on your own at your bank or another financial institution. You can do so if one of the following is true:

    • You are not an active participant in a qualified retirement plan.

    • If your spouse is participant in a plan, you can still deduct certain amount.

    If you are eligible to make an IRA contribution, you don’t have to wait till April 15 of next year. Make it as early as possible so you get maximum benefits.

    Read more about it in IRS Individual Retirement Arrangements (IRAs).

In a Nutshell
Take advantage of these benefits as early as possible in a year. If you have not already done so, talk to your HR Rep ASAP.

Also, once in a while, do visit your favorite and free tax software during the year so that you know where you stand.

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