|
|
|
> MSU News
Open a Montana Medical Savings Account before Dec. 31 for 2009 tax savings
October 20, 2009 -- MSU News Service
If you paid medical expenses in 2009 that weren't covered by your health insurance policy or a health care flexible spending account, you can still open a Montana Medical Care Savings Account by Dec. 31 to cover those expenses. Up to $3,000 of deposits in the account, per taxpayer, are deductible from your 2009 Montana adjusted gross income.
"This tax advantage does not apply to your federal income taxes and should not be confused with the Federal Health Savings Plans," cautions Marsha Goetting, Montana State University Extension family economics specialist.
People should contact their financial institution, such as a bank or credit union, to establish an MSA account, Goetting said.
A Montanan with taxable income over $15,400 could save about $207 in state income taxes by depositing the maximum $3,000 in a Montana MSA.
"It doesn't matter if you have already paid your 2009 medical bills either by check, credit or debit card," Goetting said. "You can add them up and reimburse yourself from your Montana MSA as late as Dec. 31 of this year."
You save state income taxes on the total amount deposited in the MSA. For example, if you deposited $3,000 in your MSA but only used $100 during the year, you still get to reduce your income for Montana tax purposes by $3,000. The remainder is carried over in the MSA without penalty and may be used for future years to pay eligible medical expenses.
A husband and wife who each establish an individual MSA can receive a total of $6,000 in deduction when filing a joint Montana income tax return. That saves them about $414 on their state income taxes. Even though they file taxes together they cannot have a joint MSA. Only individual accounts are eligible for the Montana MSA deduction.
Amounts held in a husband or wife's Montana MSA can be used to pay the medical bills of either spouse or their dependent children, Goetting said. For example if the husband had $6,000 in medical expenses, $3,000 from his and $3,000 from his wife's MSA could be used.
"Montana Medical Care Savings Accounts are not like flexible spending accounts where you 'use it or lose it,' " Goetting said.
Eligible expenses include medical insurance premiums, long-term care insurance, dental care (including orthodontists), eyeglasses or contacts, or prescription drugs that are paid during the year. Not covered are medical-related bills that have been already covered by a supplemental, primary or self-insured plan. Basically Montana accepts as eligible expenses any that are listed in the IRS 502 Publication, "Medical and Dental Expenses," which is on the Web at http://www.irs.gov/pub/irs-pdf/p502.pdf.
A MSU Extension MontGuide will help you decide if you would benefit from a Montana medical care savings account. MontGuide 199817 HR is free if picked up from your local Montana State University Extension office. Or, it can be ordered free from MSU Extension Publications, PO Box 172040, Bozeman, MT 59717. Or, download it free from the web at http://msuextension.org/publications/FamilyFinancialManagement/MT199817HR.pdf.
Contact: Marsha Goetting (406) 994-5695 goetting@montana.edu
|
|
|
Email this article
