Previously in this two-part series:
Some of the more long-term financial challenges for owner-operators involve retirement and health care. There’s the discipline required to save, ideally on a regular basis, and there are often income tax implications, too.
Some tax-related limits in these areas have risen in 2018 or 2019. That’s a benefit for those with enough disposable income to take advantage of them. Here are the high points:
HEALTH SAVINGS ACCOUNT. The limit for annual HAS contributions is now $3,500 for a single taxpayer, $7,000 for a family, says Michael Schneider, tax manager for owner-operator financial services company ATBS. For those over 55 years old, you can add another $1,000 to each category under a “catchup” provision.
An HSA is for those using relatively inexpensive, high-deductible health insurance. Money put into an HSA reduces your taxable income and can be used to meet expenses not covered by insurance.
INDIVIDUAL RETIREMENT ACCOUNT. The limit for an annual IRA contribution went up to $6,000 in 2018, or $7,000 for taxpayers over 50. Like an HSA, an IRA contribution reduces taxable income.
“You typically have until the due date of your federal income tax return (not including extensions) to make 2019 IRA contributions,” says Mark Martiak of Alliance Global Partners, an investment firm. The extra three and a half months to determine a contribution can be helpful since you’re better able to assess your financial situation once your accountant has a handle on your 2019 taxes.
