by Benita Tyler, Business Accountant & Tax Planner www.tbsusa.com
Q. I run my own company and plan to hire two employees this year. I'm researching medical savings account and wondered if there is any tax advantages for me as a self-employed business owner?
A. From the standpoint of tax planning, two Medical Savings Account (MSA) that you should consider are the Archer MSA and the Medicare Advantage MSA. Both plans operate like an IRA to lower your taxable income and income tax with tax free savings contributions. However, unlike IRA's where there may be a penalty for early withdrawal, an MSA provides you with access to tax-free withdrawals without penalty as long as they are used to pay for health care costs.
Some points to note for each account are:
- The Archer MSA is restricted to self-employed and/or the employees of small businesses
- The Medicare Advantage requires you to be enrolled in Medicare in order to qualify.
In addition to the tax advantages there is also the benefit of paying lower health care premiums. The offset to lower premiums, however, is higher deductibles which is something to factor in as you decide which health coverage is right for you.
Note: Ms. Tyler is not compensated for suggesting these plans and is not responsible whether or not it works for you. She's simply giving alternatives for you to research and make a decision that suits your needs... Okay? Good! Thanks for reading!
Benita Tyler, the Financial Messenger and President of TBS USA, started as a business support company in 1999. In 2000, Benita began advising business owners on income taxes and helping them customize financial systems to increase profits and savings. In 2003, Benita pioneered the “Wealthy Place Appraisal” a proprietary 7-step process that she uses to help business owners determine which decisions are moving them closer to wealth goals and which are causing them to lose ground.
Get your appraisal and more at tbsusa.com!
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