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Wednesday, July 27, 2016

One thing we hear repeatedly from people we speak to is, "I can just deduct all my medical expenses on my Federal income taxes when I file.  What's the point of using an Idaho MSA if I can do that?"

That's a great question and we will certainly address it in this blog post.  However first and foremost, there is a major misconception among the general public when it comes to deducting your medical expenses from your Federal income.

We sat down with Tom Czarniecki, CPA of Czarniecki & Company to get the a straight answer on the in's and out's of medical tax deductions, so we could come back and explain the situation to everyone else in simple terms.

After speaking at length with Tom the fact of the matter is, you can only deduct what's over the threshold!  

Let's back up a minute here, for all of you who aren't CPAs and don't really know what I mean by "the threshold".  

The Threshold, Explained

In order to deduct your medical expenses on your Federal income tax return, you must meet "the threshold", which simply means you spent more than 10% of your adjusted gross income (AGI) on those medical costs.  So for a simple example, let's say you made $100,000 last year.  You spent $10,000 (or less) on medical expenses.  You cannot deduct a nickel.  Conversely, if you made $100,000 last year and you spent $10,100 on medical, you could then deduct $100, because that is over your 10% threshold.

Most people do not even come close to meeting this requirement, and therefore cannot deduct their medical expenses on their Federal returns.  So when trying to save money by seeing if you can deduct your medical expenses, this is usually where the road ends for most people.

For Everyone Who Doesn't Meet the Threshold

If this person is you, this exactly why you'd want to utilize an Idaho MSA.  This account allows you to deduct all of these medical expenses first dollar regardless of who you are, your age, what you make, or how much you spent on medical.  It's a simple line item deduction when you file, and it's a big one at up to $20,000 per year.  It isn't a Federal deduction, but 80% of something is always better than 100% of nothing.  Or as my Grandpa always said, "It's better than a poke in the eye with a sharp stick."

If you want to see how much you could save, check out our free Idaho MSA Savings Calculator!  Just punch in what you spend on premiums, dental, vision, prescriptions, etc. and it will automatically tally what you spend annually, plus show you what you can save on your taxes simply by routing that money through the Idaho MSA!

For Everyone Who Does Meet the Threshold

As for the other side of the coin, let's assume you are one of the lucky few making up the minority that does hit "the threshold".  Congratulations, but this is hardly a free-for-all deduction party. Here's the big kicker that 90% of the public doesn't understand, and as I mentioned above:  You can only deduct what is over the threshold.

Let that sink in for a second.  You've spent over 10% of your AGI for the entire year on medical costs, but you're not getting a deduction for one nickel that was part of that initial 10%.  You're only deducting everything that was over that first 10%!  For many people spending that much money, that's a huge piece of their income they're simply paying out-of-pocket and getting nothing to show for it in return.

So to back to our original question...why would someone who hits the threshold and deducts their medical expenses want to use an Idaho MSA?  That answer is quite simple.  In order to save money on the 10% you spent out-of-pocket that you're not able to write off, even though you have the ability to deduct what was over that amount!

If you're in this camp and you're wondering what that number looks like, check out our free Idaho MSA Savings Calculator!  Put in whatever amount equates to 10% of your AGI for the year, and the calculator will show you exactly what you'll save on that money as opposed to just paying it out-of-pocket and getting nothing in return.

A "No-Brainer", All Around

For the majority of people who don't meet the 10% AGI threshold, the Idaho MSA's a no-brainer.  You have no other way of deducting anything, so why would you not simply route the money you're spending on premiums and other eligible medical expenses through this account?  You'll be saving money on your State income taxes first dollar, all the way up to a $20,000 max per year.  

Even for those people who can deduct their medical, you're still losing out on every dollar up to that 10% AGI.  Using an Idaho MSA to pay your medical expenses is also a no-brainer for all of you, because it provides you a vehicle that allows you to recoup some additional savings on those dollars for which you would get nothing...even though you can deduct everything else above the 10% threshold!

Have Questions?  We Love Them!

Tax law is some complicated stuff and it's no surprise most people don't understand these rules and how they apply to their own individual (and often fluctuating) situation.  We're definitely not CPAs, but when it comes to the Idaho MSA and how you can best utilize it to your benefit we've got you covered.  We handle everything from the mundane to the extreme every day, so please don't hesitate to contact our office and we'll tell you exactly how an Idaho MSA can help you and your family save the most money possible on your healthcare costs.

To all our existing clients, we appreciate your business!  And to those we don't yet work with, we look forward to the opportunity to serve you.  Have a fantastic day and thanks for reading!

Posted by idahomsa at 7/27/2016 5:22:00 PM
Tuesday, July 19, 2016

Congratulations, you've got an Idaho Medical Savings Account (MSA)!  You know what you can spend the money on, and you know all the tax benefits to funding it.  But the most important question of all still remains...

"How do I get money into this thing so I can start saving on my healthcare costs?"

We get this question all the time, and the answer is that there are many different ways to fund your Idaho MSA.  We'll go over all the ways you can make deposits to your account below, and as always, please don't hesitate to contact our office with any questions and we're happy to help!

How To Fund Your Idaho MSA:
 

  1. Using a Debit or Credit Card:

    You can use any debit or credit card to transfer money into your Idaho MSA from our website.  

    When making a deposit, you have the choice to make a "one-time" contribution, or you can choose to make them recurring.  If they're set up to be recurring, we will pull a set amount either weekly, bi-weekly or monthly, whichever you prefer.  We will continue to automatically fund your Idaho MSA from that card until you tell us to cancel the recurring transaction.

    Please be  sure to note these transactions are not instantaneous.  Processing funds electronically can take 2-3 business days.

    Funding with a debit/credit card is quick, simple, convenient, and many people choose to use their credit cards so they can also take advantage of rewards programs or bonus miles they earn for using those cards.  That's a double-dip, and a great way to take advantage of those rewards while funding your Idaho MSA at the same time.  You don't even need to leave your couch to do it!  Excellent strategy!
     
  2. Mailing A Physical Check:

    You can write a check from any existing bank account and mail it into our office.  As soon as we receive your check, we will deposit those funds into your Idaho MSA.  When selecting this method be sure to account for the postal mail time, and also be sure to indicate the check is for your Idaho MSA so we know where to put the funds when we receive them.

    To mail us a check, use the following address:

    Idaho Independent Bank
    Attn: Healthcare Accounts
    401 W. Front Street #100
    Boise, ID 83702
     
  3. Mobile Check Deposit:

    If you've got a smartphone, you can download the IIB mobile app and make deposits with your camera!  Just log into the app, snap a picutre of the check and you're good to go.
     
  4. Electronic Transfers with "Transfer Now":

    Our newest deposit feature allows you to quickly and easily transfer funds into your Idaho MSA from any bank account you own at any financial institution.  All you need to do is log into IIB's online banking portal and from there, you can set up these transfers as "one-time", or you can set up a recurring series.  There is no fee to do this, and it's a quick and simple way to make deposits no matter where you'd like the money to pull from.
     
  5. Using Online Bill Pay:

    If any of your existing bank accounts have bill pay, you can use that feature to essentially "pay yourself" automatically.  This is usually a free service, and all you need to do is set your Idaho MSA up as the entity that needs to be paid.  Put in your account number, and use our address listed above.  This will have a check generated from your bank and mailed on your behalf to be deposited into your Idaho MSA when it is received.  Typically, you can set this up to either be "one-time" or recurring, depending on how often you'd like to send funds to your MSA.
     
  6. Walking Into Any Idaho Independent Bank Branch:

    You can head into any of our bank branch locations to make a deposit, just like you would for any other bank account. Come stop in, we'd love to see you!  

That's a lot of options, and there are usually one or two that work great for everyone.  If you don't see something that would work for you or you have questions, please don't hesitate to let us know and we can help you find a solution that works.  

I hope this information was helpful, and we appreciate your business!  All of us here at Idaho Independent Bank look forward to the opportunity to help you and your family save money on your healthcare costs this year with your Idaho Medical Savings Account!

Posted by idahomsa at 7/19/2016 9:18:00 PM
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