New Health Savings Accounts Useful for Tax Avoidance
USA Today describes the new tax-free medical savings accounts that are part of the Medicare bill that Bush will be signing in a few days.
(“Health savings can be tax shelter”).
According to the article, the new law allows people to sign up for these accounts starting — if they can find a company that’s ready to administer the plans.
To qualify for the plans, you have to have a “high-deductible” medical insurance policy (“As defined in the new Medicare legislation… a high-deductible policy is $1,000 for individual coverage, $2,000 for a family.”)
The accounts will join about a half dozen other major provisions in the federal law that provide a tax advantage for health care spending.
But nothing now in the law combines the broad eligibility and generous tax benefits of HSAs.
“This is far and above superior to all the other ones that are out there,” says Jay Nawrocki, legislative analyst at tax publisher CCH.
Contributions, investment growth and withdrawals for health-related expenses are all free from taxation.
That makes tax benefits superior even to IRAs.
With IRAs, the money is taxed either before it goes into the investment account, or as it is taken out.
Of course, money from an IRA, when taken after age 59½, can be spent without restriction.
Health savings accounts carry generous annual contribution limits.
The law allows an annual tax write-off equal to the deductible amount of the accompanying health care plan.
But the tax write-off can’t exceed $2,250 for an individual plan, $4,500 for a family plan.
Limits bump higher in years ahead.
And there’s no sign of slowing down.
Word on the street is that Dubya is looking for some circuses to butter his bread with and has decided on a bold expansion to the space program — we’re going back to the moon, and then to mars!
The Doing Freedom! site advocates an interesting approach to disengagement from government:
These days in the US, one of the best ways of doing freedom is to unsubscribe from a coercive government, depriving the State of your financial support.
And for me, the easiest way to unsubscribe was to go permanent tourist.
Jesse Weller, an IRS spokesman, said Wednesday that confidentiality laws prohibit him from addressing Hill’s federal tax status.
But Weller said any taxpayer who refuses to pay what is owed the government faces the “full weight of the IRS civil and criminal process.”
About Hill’s public no-tax-payment declaration, Weller said, “It is a very serious matter.…”
IRS spokesman Weller said one way or the other, a defiant taxpayer like Hill will end up paying more taxes and fines than originally owed.
“There is no law in the land that even suggests you’re free to avoid paying taxes for any reason,” Weller said.
Carl Watner has dug up some detailed information about the poll tax that Henry David Thoreau was resisting all those years ago — how it was administered, who was the collector, and how his imprisonment for tax refusal wasn’t actually justified by law (although “Staples, the tax-collector, and Thoreau were probably unaware of the provisions of the statute.”)
If this sort of historical detective work interests you, take a look at his short article: Highway Tax vs. Poll Tax: Some Thoreau Tax Trivia.