how to minimize my tax

[pb4uski]

so I checked my employer health insurance, it's a HDHP. I guess I'd be eligible. So how do I go about getting a HSA? do I open an account on my own, give them my payroll info and they will do the pre-tax deduction or do I start with my employer side first?

looks like Vanguard and Fidelity have FSA accounts.

Health Savings Accounts | Fidelity WPS

You need to verify that your HDHP policy is HSA eligible. Some HDHPs are and others are not.

If your HDHP is HSA eligible, typically the employer also offers a HSA. In fact, my former employer made contributions to our HSA if we selected a HSA eligible HDHP. But some employers don't offer the HSA even if the HDHP is HSA eligible.

 

[Mulligan]

so I checked my employer health insurance, it's a HDHP. I guess I'd be eligible. So how do I go about getting a HSA? do I open an account on my own, give them my payroll info and they will do the pre-tax deduction or do I start with my employer side first?



looks like Vanguard and Fidelity have FSA accounts.



Health Savings Accounts | Fidelity WPS

If I read your earlier post correctly, you are receiving no employer contributions. If that is the case you are free to set up with who you want to. If this is the path you choose you will claim your tax deduction when you file your yearly taxes. This is just my opinion, but I think you go in with one of two strategies. Either plan on putting it in there with the idea you will be using for immediate or short term health needs thus keeping funds in the low interest bearing accounts. Or do what I am in the process of doing which is converting most of it to long term investments (15 plus years) and being prepared to bite the bullet and pay everything out of pocket while saving the medical receipts.


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[FUEGO]

A big benefit of going with your employer's choice of HSA provider is avoiding the 7.65% payroll taxes. If you open up your own HSA at the custodian of your choice, you will still pay payroll taxes on the amounts contributed to the HSA.

 

[Lurking]

Perhaps re-frame your goal?

I don't have any specific suggestions, but rather than looking at it as "minimizing taxes" I would suggest you look for ways to "maximize after-tax income". I've seen all sorts of hare-brained approaches to minimize taxes result in far, far less money overall. Given the human predisposition to loss-aversion, I understand where you are coming from -- but I think that looking to avoid taxes can actually lead you to less than ideal decisions.

To share a personal example of this, I left an employer in 1999 holding on to some shares of ESPP stock. I had more income that year than I would the following year, so I decided to push the tax burden until 2000 -- you know, to minimize taxes.

Come January, the stock had appreciated nicely, and now I was about 6 months away from long-term capital gains! I'll just hold it a little longer... you know, to minimize taxes.

... Not much past January the stock started to drop. Oh my. It's now back down to where it was in November. I'll just hold on a little longer -- it's only two months to LTCG! It just dropped more... but now it's only one more month to LTCG! ... and so on.

The day it became long-term capital gains I sold. Thankfully, I was still up (slightly) from where I acquired it, so I guess you could say that I did save 10% or so on taxes. However, to save that 10% on taxes, I gave up *50%* of the stock price between January and June (and about 75% of the gain from the peak to when I sold).

I honestly believe that had I framed the problem differently to myself ("how can I maximize what I can save/spend" rather than "how can I minimize taxes") I would have been better equipped to avoid that particular trap.

I realize that this doesn't apply to your situation, but I offer it in the hopes that you or others may learn from my mistake. I know that I have!

Lurking