While the IRS says the new W-4 is supposed to be less complex, employees are going to need a bit of an explanation. Here it is in layman's terms.
Saving Tax Dollars in 2015
Saving Tax Dollars in 2015
It’s that time of year when, in the midst of the holiday rush, every dollar needs to be stretched as far as it possibly can. It’s with that mindset that our experts have outlined a few employee “must-haves” when it comes to saving tax dollars in 2015. After all, you work hard to bring home a paycheck – so don’t miss an opportunity to save tax dollars on that hard-earned money.
FSA & HSA
As an employee, there are two savings accounts that will allow you to pay for health-related expenses from money that is pre-FICA, state, and federal income tax (which combine for an average tax rate of about 35-40%). The first is a Flexible Spending Account, or FSA, which must be offered through your employer. The maximum amount you can contribute to an FSA for 2015 is $2550. That’s a potential (average) tax savings of nearly $1000! If your employer doesn’t offer an FSA, please have them contact our sales team to learn how quickly we can help with that. The second is a Health Savings Account, or HSA. You must have a High Deductible Health Plan, or HDHP, to setup an HSA, but are allowed to contribute anywhere from $3350 - $7650 in 2015 (depending on your plan and age). That’s anywhere from $2600-$3000 in tax savings if you have a family plan!
Beyond health-related accounts, you can also contribute to a 529 (college savings) account for your child or grandchild, which provides a 5% Utah state income tax deduction of up to $3000 in contributions, or $150 in tax savings. For the future college enrollee, earnings are federal and state tax-free, as long as the money is used for education expenses.
If your employer provides a 401(k), make sure you are taking full advantage of any employer match options. In 2015, the maximum amount you can contribute towards either a Traditional and/or Roth 401(k) plan is $18,000 ($24,000 for anyone age 50+). A Traditional 401(k) allows you to contribute tax-deferred money, meaning you won’t pay taxes now, but you’ll pay taxes when you begin making withdrawals on your contributions, as well as your earnings. A Roth 401(k) requires you to pay taxes now; however, your earnings will be tax-free. If your employer doesn’t offer a 401(k) plan, please have them contact our sales team to learn more about Stratus.hr's multi-employer plan that is available at no cost to your employer.
‘Tis the season to spend money – but just around the corner is the New Year. Contact us today to learn more about what Stratus.hr can do to help your organization provide more employee benefits and help you (and your employer) save more tax dollars than ever!