The saying “health is wealth” has taken on a new definition, thanks to the tax credits the government provides. Before, staying healthy means wealth because you don’t have to spend a significant amount of money on hospital bills. Now, going the healthy route also means saving more money on your taxes.
Three of the best ways you can do so is by opting for renewable energy, opening a health savings account, and undergoing medical procedures that prolong your life. Wherever you are in the country—Albuquerque, Anchorage, or Salt Lake City—call your nearest water heater repair and installation expert and insurance agent, so you, too can enjoy these perks.
Switch to renewable energy
ENERGY STAR certified products are cost efficient not only because you save energy, but also because you can apply for tax credits. The Bipartisan Budget Act of 2018 offers tax credits for renewable energy, particularly geothermal heat pumps, fuel cells, solar energy, and small wind turbines.
You can apply this to your home systems, such as the water heater. When you do, that’s the time you can qualify for tax credits. Just make sure the systems are placed in service and you apply for the credits on or before January 1, 2022. In addition, the property should be your residence and not a place you are renting.
This means you are saving yourself from harmful elements produced by the burning of fossil fuels or coal. You are also saving on energy consumption while getting tax credits as perks.
Get a health savings account
If you have a health savings account (HSA), you can also save on your taxes. IRS’ Publication 969 provides tax benefits for a health savings account and medical savings account.
HSA is an account you use to pay for various medical costs. Some health insurance agents provide HSAs, particularly to individuals who have a high-deductible health insurance plan (HDHP). If your agent doesn’t offer the service, you may ask other financial institutions for help.
The government does not mandate the amount you can contribute to HSA, although there is a limit. For individuals, you can contribute up to $3,450 while it’s $6,900 for families.
If you are employed and your employer processes your health plan, they will handle the tax deductions for you as well. Otherwise, you claim it by yourself when you file your tax return.
Let’s say you promised to stay sober for the rest of your life, so you got yourself therapy for alcoholism. The government will give you a tax credit for that, according to IRS’ Publication 502. To qualify, your medical expenses should be more than 7.5% of your AGI or adjusted gross income.
Other expenses you can get a tax credit for include acupuncture, dental treatment, drug addiction therapy, fertility enhancement, some laboratory procedures, etc.
Publication 502 also includes tax credits for insurance premiums unless you are claiming credit or deductions for such premiums. If your employer sponsors your health insurance plans, you cannot include it in your tax creditable medical expenses. You may only do so if your Wage and Tax Statement or Form W-2 consists of these premiums.
Health is indeed our wealth, so we should always take care of it. Poor health causes unnecessary spending and may lead to job loss. The opposite is true, however, when you’re healthy: You avoid medical expenses, keep your job, have more opportunities to earn, and save on taxes.