If you have a Health Savings Account, or HSA, and aren’t using it to pay for medical epenxes, you are missing out on tax benefits.

As we explain in our Health Savings Account Guide, HSAs have a triple-tax advantage:

• Put Money in Pre-Tax – Contributions put into an HSA are not taxed. Meaning, your adjusted gross income on your taxes will decrease by the amount you deposit.

• Interest and Investment Gains are Not Taxed – Once your cash balance hits a certain threshold (i.e. $1,000, $2,000, etc.) you can shift any money above the threshold into an investment account. The investment gains are not taxed.

• Withdraw Money Tax-Free – When you withdraw money to cover a qualified medical expense you are not taxed on the withdrawal. In general a qualified medical expense is defined as an expense that pays for healthcare services, medications, or equipment. Clear-cut examples include a prescription you get at a pharmacy or a bill from a doctor visit.

At a minimum, it makes sense to deposit money into your HSA and reimburse yourself for qualified expenses so that you are paying with before-tax dollars.

So how much can you contribute to an HSA? For 2023 the IRS has set contribution limits for HSAs to $3,850 for an individual or $7,750 for a family. For those over the age of 55 there is an opportunity to contribute an additional $1,000.

Besides contributing to your HSA and reimbursing yourself for qualified medical expenses, there are a couple of other ways to optimize your HSA. You can read a more detailed explanation in our post 2 Hacks to Maximize your HSA Health Savings Account, but at a high level they are:

• Pay with a credit card, not with your HSA debit card – When you pay with your HSA debit card, you don’t receive any rewards like cash back or points. Use a rewards credit card that either provides you with travel rewards or cash back. You can view all the latest credit card sign-up offers here.

• Track your qualified medical expenses, then reimburse them years down the road from investment gains – What most people don’t realize is there is no time limit for reimbursing your expenses from your HSA. Meaning, if you incur a qualified expense in 2023, for example, you can reimburse it at any point in the future, even years down the road (you must have had an HSA when the expense was incurred for it to be eligible for reimbursement).

The benefit of tracking your medical expenses and reimbursing later on is that you can keep more cash in your HSA, which allows you to invest more money. Remember, the investment gains are not taxed, so you can keep building your investments tax-free.

Think of the alternative. If you reimburse yourself for a medical expense immediately from your HSA, that cash exits your tax-sheltered HSA account, and you miss out on all the tax-free investment gains.

HSA Medical Expense Tracking Spreadsheet

 
The best way to track your medical expenses is in a spreadsheet. That way you have a record of what expenses you’ve paid for but haven’t reimbursed from your HSA. Then at any point in the future you can reimburse yourself for some or all of the expenses in your spreadsheet.

Here’s my approach:

• Create a folder to store your receipts.
   
  Include the date and some sort of unique descriptor (e.g. 2022_12_15 Chiropractic Block of Care Robert).

• Add the expense to a tracking spreadsheet.
   
  In the first column, include the name of the receipt (e.g. 2022_12_15 Chiropractic Block of Care Robert). That way you can easily locate the receipt that aligns to the row. Remember, if you use the strategy of reimbursing yourself later on, you may need to go back years later – make it easy on yourself. Include other details in the spreadsheet such as what payment was used, the servicer/company you paid, cost, etc.

Instead of starting from scratch you can grab a copy of our free HSA medical expense tracking spreadsheet.

I included a couple examples in it to give you an idea of the type of details you may want to record. You can grab this spreadsheet for free by entering your email in the below form:

A complicated tax code means filing taxes can be a headache, or for some of us a migraine.

The one good thing about the complicated tax code is that it creates opportunities to pay less in taxes. Legal opportunities.

In fact, the government has intentionally built in these opportunities because it creates incentives for good behavior. This includes saving for retirement, building a medical emergency fund, and donating to nonprofits.

Due to the content of this post, before we get started I want to give a quick disclosure. I am not a tax accountant or a certified financial planner. This post shouldn’t be taken as advice for your specific situation, and you should always consult your CPA and financial advisor on your specific financial situation. You can also read our full disclosure here.

With that out of the way, I first want to share why my wife and I personally care about saving money on taxes, other than the obvious benefit of having less money going out the door.

Why I Love Lowering My Taxable Income

 
One unique reason I get so excited about talking about taxes is the fact that my family is one of the over one million student loan borrowers who have made at least one qualifying payment towards Public Service Loan Forgiveness (PSLF).

I go into more detail about our situation in my post I can afford to pay off my student loans, but I won’t: here’s why. In general, though, anyone pursuing PSLF has an incentive to lower their Adjusted Gross Income, or AGI, as much as possible. The lower your AGI, the less you pay towards your student loans. The less you pay towards your student loans, the more you benefit from having your loans forgiven.

Even if you aren’t trying to maximize Public Service Loan Forgiveness there are still good reason to take advantage of opportunities to save money on taxes. There are millions of people who are paying for qualified medical expenses like doctors’ bills or prescriptions who could be using pre-tax money, but instead are paying after taxes.

It’s also worth noting that there are some situations, such as qualified medical expenses, where you truly can use pre-tax income or investment gains, but in many cases you are deferring taxes. For example, if you put $10,000 into a 401(k) retirement account today, you don’t get taxed on that income today. But you will eventually get taxed on that income when you withdraw it. Whether the tax rate is higher or lower today or when you withdraw the money is unknown.

Let’s go over some of the examples where you can save money on taxes this year, either through deferring taxes or through truly paying for expenses with pre-tax income. Well start with the more straightforward options and move to some that are a bit more obscure or complicated.

Contribute to Employer Retirement Accounts

 
Employer retirement accounts include the 401(k), 403(b), and the solo 401(k).

The difference between a 401(k) retirement account and a 403(b) retirement account is simply type of employer. A 401(k) is used by for-profit companies and a 403(b) is used by nonprofits and government organizations. They are very comparable. Self-employed people aren’t left in the cold, as they also have a comparable option in the solo 401(k).

The IRS sets employee contribution limits for 401(k)s, and the limit for 2020 is $19,500. Those 50 and older can contribute up to an additional $6,500.

The money you deposit in your 401(k), 403(b), or solo 401(k) is pre-tax. That means each dollar you contribute lowers your taxable income by a dollar.

Once you reach the age of 59 1/2 you can start withdrawing from a 401(k) without an early withdrawal penalty. For tax purposes your withdrawals will be treated as ordinary income. If you withdraw prior to the age of 59 1/2 you will have to pay income taxes on the withdrawal and pay a 10% early withdrawal fee. There are some exceptions to the penalty if you retire at age 55 or later.

Contribute to a 457 Plan

 
If you are eligible to contribute to a 457 plan you have even more options available to you. This is a tax advantaged deferred-compensation retirement plan available to governmental and some nongovernmental employees.

The Contribution limit for a 457 plan is $19,500 in 2020. Those 50 and older can contribute up to an additional $6,500. The big benefit of a 457 plan is that you can contribute to both a 457 plan and a 403(b) or 401(k) plan.

If you are working towards PSLF, and have access to both a 403(b) and 457 plan, for example, you could contribute $19,500 towards a 403(b) and $19,500 towards a 457 plan for a total of $39,000. And that’s all before any additional opportunities.

Contribute to a Standard IRA

 
Another opportunity to defer taxes is through an Individual Retirement Account, or IRA. With an IRA you have the option of contributing to a Roth or a Standard IRA, depending on your income.

You contribute to a Roth IRA with after-tax dollars, meaning it won’t save you any money today. On the flip side, though, you could save a lot of money down the road because you can take out any money – including gains – tax-free.

If you are looking to lower your taxable income this year, though, you will want to take a look at a Standard IRA. Contributions go into a Standard IRA pre-tax, resulting in lower taxable income.

The contribution limit for both a Roth and Standard IRA is $6,000, or $7,000 for those 50 and older. Roth IRA contributions may be limited based on your income and filing status.

Contribute to a Health Savings Account (HSA)

 
Health Savings Accounts, or HSAs, are a great opportunity to shield income from taxes. These are unique in the sense that unlike the retirement accounts we’ve talked about so far HSAs can be a way to avoid taxes on income altogether, not simply deferring taxes to a later date.

The “triple tax advantage” of HSAs include:

• Contribute funds tax-free

• Withdraw funds tax-free when used for a qualified medical expense

• Invest funds after reaching a certain balance (i.e. $1k or $2k); investment gains are not taxed when withdrawn for qualified medical expenses

For 2020 the IRS has set the contribution limit for HSAs to $3,550 for an individual or $7,100 for a family. For those over the age of 55 there is an opportunity to contribute an additional $1,000. You must have a High-Deductible Health Plan (HDHP) to be eligible to make contributions.

Your HSA stays with you. There is no “use it or lose it,” and it doesn’t matter if you switch to a different health plan.

For a more thorough overview check out our 2020 Guide to Health Savings Accounts.

Realize Investment Losses

 
I don’t want to jinx us, but it’s been a little difficult to realize investment losses over the past five to ten years. The stock market returned nearly 30% on average in 2019.

Don’t get me wrong: not having investments to sell at a loss is a good problem to have.

But if you did own stock that lost value, one option to lower your taxable income is to sell the shares at a loss and offset gains. You can also carry forward these losses to future years. If your losses are greater than your gains by more than $3,000, the losses in excess of $3,000 can be carried to future tax years.

Contribute to a 529 Plan

 
A 529 plan is operated by a state or educational institution that offers tax advantages when used for college savings. There is quite a variety of 529 plans as each state typically offers their own plan, but you don’t have to go with your state’s plan. (Simple enough? Kidding.)

I won’t get into the pros and cons of each state’s plan and which is better for who, but let’s talk about them at a high level. Contributions are not deductible, but earnings are not subject to federal tax (and typically not state taxes either) when used for qualified education expenses of the designated beneficiary. These expenses include things like tuition, fees, books, and room & board.

Like Health Savings Accounts, 529 plans give you the opportunity to not pay taxes on a portion of your income. They aren’t as advantageous as HSAs because contributions to a 529 plan are not pre-tax, but the investment gains are.

I personally think most people would be better off focusing on other financial goals other than contributing to a 529 plan. I go into more detail in my post Before You Contribute to a 529 Plan – Read This

Make Charitable Contributions

 
Charitable contributions can lower your taxable income when you itemize your deductions. But the 2017 tax law nearly doubled the standard deduction to $24,000 for a couple and $12,000 for a single tax filer. This increased to $24,400 and $12,200, respectively, in 2019. Because of these changes the Tax Foundation estimates that less than 14% of taxpayers will itemize their deductions in 2019.

If you hit the jackpot on a slot machine or have a high income and want to find ways to lower your taxable income specifically on this year’s tax return, you can consider a donor-advised fund.

Essentially someone can make a contribution in one year, get the tax benefit in that year through itemizing their deductions, and in turn make grants from the fund at any point in the future, to as many organization as they want.

If you take this route you definitely want to get your tax accountant and lawyer involved.

 
I’m sure I’m only scratching the surface with this list, but for a majority of individuals these options are what will be used to lower taxable income. A good tax accountant can help you navigate the inevitable complexities of tax strategy, but even contributing to a tax-deferred retirement account like a 401(k) or 403(b) is a good first step.

I will end this post by reminding you to discuss your personal financial situation with your accountant and financial advisor to see how these options could potentially fit in your current plan.

It’s time to start compiling your tax information if you haven’t already. Whether you take your taxes to a professional or you complete them yourself, there is an ample amount of work to do in preparation of filing your taxes.

Preparing yourself beforehand can save you time, money, and can help make filing your taxes a breeze. In short, adequate preparation can make tax season a whole lot easier for everyone if you have the right documents and information on hand before you get started.

Before you dive into filing your tax return, here’s everything you need to do before you start.

Forms of Identification

 
If you are going to a tax professional, you will need to provide proof of identification. Usually, this means you need to provide documents such as your driver’s license, passport, or something else. This is so tax professionals can verify your identity to ensure you aren’t posing as someone else or trying to steal someone’s identity.

Further, you will want to bring a voided check so you can route any tax refunds back into your checking account. Even if you have these numbers memorized, it is risky to go without a check with a printed routing and account number. In the event that there was just one small error, this could prevent you from receiving your tax refund – ever.

And while you won’t necessarily need copies of every family member’s social security card, you will want to make sure you at least have their social security numbers.

Gather Documentation of Income

 
Next, you will want to round up all of the documents that prove your income. While some documentation of income is more obvious, such as receiving a W2 from your employer, there are many less-clear documents that fall under this category.

Documentation of wages may include some of the following:

• W2: Every company you work for should supply you with a W2 if you are on their payroll. Starting in January, employers will send you your W2, which lists all of your income from them in the given tax year. They have until January 31 to send this to you. Keep in mind, if you worked for more than one employer throughout the year, you will be getting a W2 from each of them.

• 1099: Are you a freelancer? If you perform work as an independent contractor and earn over $600 for a client, then each client is required to provide you with a 1099 form. 1099s differ from W2s because you completed the work independently, so no taxes have been taken out of your income yet. (Did this catch you off guard? Read our post on quarterly estimated taxes to be ahead of the game next year.)

• 1099-Div: You will receive a 1099-Div if you received any dividend payments from investments such as stocks.

• 1099-R: If you withdraw money from a retirement plan, such as your IRA, 403(b), or 401(k), you will receive a 1099-R, which is vital for tax reporting purposes.

• 1099-Int: If any bank or brokerage account paid you more than $10 in interest, they are required to send you a 1099-Int form. Often, you can find these if you login to your bank online.

• W2-G: For any gambler, you will receive a W2-G if you win $500 or more through gambling. (Congrats! But yes you do have to pay taxes on these winnings. You can offset with any losses, as long as you kept track of them.)

Gather Documentation of Expenses

 
Next, you will need to gather documentation that proves your expenses. Even if you don’t own a business, there are plenty of expenses that may be deductible. Listed below are common expense you may want to find documentation for:

• Cost of education: If you went to college or took a class, you will receive a 1098-T from the institution. File this in your records for when you complete your taxes.

• Medical expenses: If you had high medical expenses this year, you will want to put any receipts in your tax file. In 2019, the IRS allows you to deduct medical expenses if they exceeded more than 10 percent of your Adjusted Gross Income.

• Donations and charitable contributions: Many people know you can deduct charitable contributions or donations. Whether you give cash to an organization, or you donate old clothes or furniture, always ask for an itemized receipt so you can deduct the expenses come tax time.

• Expenses related to self-employment: If you work for yourself, you likely incur quite a few additional expenses, such as mileage or the cost of a home office. Gather all of your receipts. If you’re self-employed, it’s a good idea to have an accountant on hand who can help you sort out your business liability as well. (If you didn’t keep good records last year, commit to starting this year.)

• Documentation of mortgage interest: If you own a home, your mortgage lender is required to send you Form 1098, which outlines how much you paid in interest during the given tax year.

• Moving expenses: For anyone who has moved during the tax year, you may be able to deduct the expenses from your income.

• Individual Retirement Account contributions: Since Traditional IRAs are made with post-tax dollars, you can deduct them from your income.

These are just a few of the most common expenses. If you have miscellaneous expenses, such as gambling losses, eco-friendly home improvements, union expenses, or something else, always keep the receipts and ask your tax professional.

Get Organized

 
Now that you have all of your necessary documentation, it’s time to get organized. If you work with a tax professional, you can save time and money by organizing yourself ahead of time versus simply handing your accountant a large stack of receipts.

Sort out your receipts by type. For instance, group all of your educational expenses together and total them up. Keep a running list of the total amount of expense you believe you can deduct. Organize your receipts by filing them by type and bring them when you meet with your accountant. This way, your receipts act as backup to the calculations you’ve already completed in the event your accountant has questions.

While we can’t give tax advice, if you’ve spent all the time and effort towards getting organized it may make sense to file your taxes yourself.

For complicated returns tax accountants can be helpful, but software like TurboTax will be sufficient for most returns.

Give Yourself Plenty of Time

 
Nothing is worse than the last minute scramble. Not only will you be more disorganized and flustered, but you will have a hard time finding a tax professional if you wait until the last minute. Start preparing for your taxes as early as possible.

Take Notes for Next Year

 
Taxes can be overwhelming, but in theory, they should get easier every year. Take notes during and after the process so you can make your next tax season even more efficient. Remember, good record-keeping is the key to a successful tax year. If you felt you weren’t as organized as you would have liked, take note and create an organizational system that works for you in the upcoming year.

Once you’ve gone through all these steps you are ready to file your taxes! We recommend using TurboTax to file your taxes.

 
 
How do you prepare for tax season? What were your biggest successes? What do you wish you did differently during last year’s tax season?
 
 

No one really teaches you how to do taxes – you’re just expected to know what you’re doing.

You may hear certain tax terms thrown around, but do you know what they really mean? If not, that’s okay! Taxes are complicated, but that’s where you can turn to online resources to help.

One of the most common (and often confused) tax terminologies include the tax credits and tax deductions. These both work to provide you with tax breaks, but they work differently. Here is everything you need to know about tax deductions, tax credits, and the difference between both.

What is a Tax Deduction?

 
Tax deductions work to lower your annual taxable income. By lowering your taxable income, you theoretically should owe less in taxes.

There are two different ways you can claim tax deductions. The first option is to claim the standard deduction. Any taxpayer can automatically claim this deduction, which is dependent on your filing status. For instance, married couples who are filing a joint tax return are eligible for the largest standard deduction.

The second way you can claim deductions is to itemize each individual deduction. This means you will list out each individual expense you want to write off on your tax return. This is more tedious, but can prove very worthwhile if your deductible expenses are higher than the standard deduction.

Now, there are a few deductions you can only use if you choose to itemize your return. However, deductions like the student loan interest deduction are considered to be above-the-line deductions. This means you can claim this deduction even if you aren’t itemizing every deduction.

Other common tax deductions available for the 2018 tax year are listed below:

• Home office use

• Contributions to a traditional IRA

• Moving expenses to start a new job

• Charitable donations

• Medical related expenses

• Tuition and fees

• Mortgage loan interest

• Property tax

Remember, your ability to claim certain deductions is dependent on various qualifications, including your household income and filing status. You can check to see if you are qualified for a certain tax deduction by visiting the IRS’ website.

What is a Tax Credit?

 
Tax credits work to reduce the amount you owe in taxes. Unlike a tax deduction, which lowers your total taxable income, a tax credit is just that – a credit.

For instance, if you owe $4,000 in taxes but you qualify for a $1,500 tax credit, your total tax liability would be reduced to $2,500.

Clearly, tax credits can save you a significant amount of money when tax time rolls around. But what do you have to do to receive a tax credit?

To qualify for a tax credit, you must meet certain criteria, which is often based on your income, age, and filing status.

If you are eligible to claim a tax credit, keep in mind that some credits are non-refundable. A non-refundable tax credit will not refund you if the credit brings your tax liability to a negative number. For example, if you are eligible for a $1,500 tax credit, but you only owe $1,000 in taxes, you would not be reimbursed for the additional $500 if it is a non-refundable credit.

Fortunately, there are many refundable tax credits available, which can put more money back in your pocket. Some refundable tax credits include the Additional Child Tax Credit, the Earned Income Tax Credit, Health Coverage Tax Credit, and the Small Business Health Care Tax Credit.

Lastly, it’s important to note that you cannot claim a tax credit and a deduction for the same qualified expense.

Is Either a Tax Deduction or a Tax Credit Better than the Other?

 
While both tax credits and deductions are helpful for saving you money during tax time, you may be wondering if one is better than the other. Generally, tax credits will go further to save you money because they reduce the overall amount that you may owe. A tax deduction can certainly help to save you money, but it won’t affect your bottom line as much as a tax credit will.

For instance, if you are in the 10% tax bracket and claim a $1,000 deduction, that only reduces your taxable income by $100. That’s certainly better than nothing (especially if you have multiple deductions to claim), but it’s no where near the benefit you will receive from a tax credit.

However, it’s still worthwhile to crunch the numbers on your own to ensure that you’re getting the best tax break available.

Related:

• The Ultimate List of Tax-Advantaged Accounts

• 10 Smart Things to Do With Your Tax Refund

• 5 Ways to Start Preparing for Tax Season Now

 
 
Tax season is a little ways away, but what are you doing now to prepare? Have you benefited from claiming a certain tax deduction or credit?
 
 

Many people go into tax season having on idea whether they will end up owing taxes or will be getting a refund.

And while many finance experts may say that it’s best to not receive a refund, many feel better when they do receive an income.

My wife and I have taken the approach of erring on the side of receiving a refund versus owing money come tax time. Why? Because we had an $8,000 tax bill before and it wasn’t fun (there may have been tears). It truly was the perfect storm of not having enough money withheld and not calculating quarterly estimated tax payments appropriately for my side hustles.

Not surprisingly I’ve spent a decent amount of time since then reading up on taxes. And today I want to give you tips on how to make sure you receive a tax refund next year.

Claim Zero Allowances on your W-4

 
The allowances section on a W-4 is a mystery to most people. You likely have heard the general advice “claim 0 or 1,” but what does that mean?

In short, claiming zero causes your employer to withhold more from your paycheck; claiming one causes them to withhold less. It’s generally recommended that if you are single with no dependents you should claim zero. If you file jointly with a partner and have no dependents or if you are single with one dependent it’s generally recommended you claim one allowance. Depending on the size of your family it may make sense to claim two, three, four, etc. allowances.

If your primary goal is to receive a tax refund, though, claiming zero is the way to go regardless of your filing situation or number of dependents. Why? Because it causes your employer to withhold the most amount of money.

Again, there are many personal finance experts who say you should shoot for having no refund and owe as little as possible to the government, and it does make logical sense. But if your goal is to get a tax refund, claiming zero is the best move.

Have Additional Dollars Voluntarily Withheld Each Paycheck

 
Did you know that you can voluntarily have extra money withheld each paycheck for federal and/or state taxes? Most people don’t because they haven’t had a reason to.

Let’s say you have three part-time jobs. Even if you claim zero allowances, each employer is going to withhold taxes as if this was your only source of income. Meaning, even if you build up a sizable taxable income, you may have had very little withheld from any of the three employers and you could very well be stuck with a big tax bill.

In this scenario and various other scenarios it doesn’t make sense to rely on your employer to withhold the proper amount of money from your taxes. You will want to voluntarily have money withheld each paycheck.

This also makes sense if you have side income but aren’t paying quarterly estimated taxes, which we will review next.

Make Quarterly Estimated Tax Payments for Side Income

 
If you have income outside of your 9-5 job such as dog walking, blogging, or freelance writing, you should make quarterly estimated tax payments.

If you haven’t made quarterly estimated tax payments in the past you are probably wondering what the heck they are. Don’t worry, most are not familiar with them until they need to be (usually after owing a relatively large amount of money to the IRS after filing their taxes.

Because business, self-employed, and side hustle income doesn’t come through an employment relationship, there is no employer withholding tax dollars like there is for a 9-5 job. That means it falls on you to make the appropriate estimated tax payments to the IRS each quarter.

A few years back when my wife and I got hit with a big tax bill I made it a point to understand quarterly tax payments inside and out. I share about quarterly tax payments as well as a calculator in this post. I recommend you check it out if you have a side hustle or side income.

None of these strategies can guarantee you will get a refund, but they will make it much more likely. If you are really paranoid about taxes it makes sense to spend some additional time looking into things like tax-advantaged accounts and regularly reviewing how much has been withheld for taxes and paid in quarterly estimated taxes relative to the income you’ve made.

 
Related:

• How to Pay Taxes for Side Hustles and Extra Income

 
 
Do you like getting a tax refund? Have you ever owed a lot to the government at tax time?
 
 

As much as I love building something that is all my own, there is one thing from my old job that I miss dearly. No, it isn’t the paycheck (although that would come in handy now that the severance has run out). It is the employee benefits package.

My former employer offered its employees a veritable treasure trove of perks, amounting to thousands of dollars in compensation above our salaries. It wasn’t until I was transitioning out of the company that I really dove into everything that was available.

Every year American workers leave thousands of dollars on the table in the form of company benefits. According to the U.S. Department of Labor, on average combined benefits are worth 30% of total compensation.

To ensure that you are getting the absolute most value from your labor, here are thirteen benefits you should take advantage of if your employer offers them.

1) Health Insurance

 
Due to the Affordable Care Act, any employer with over 50 full-time employees (30 or more hours per week) is mandated to provide healthcare coverage.

Healthcare is an expensive good and the cost is only rising. Using group buying power, companies are able to negotiate substantial discounts on health insurance plans. They also subsidize the cost of premiums. The Labor Department estimates that health insurance benefits are worth more than $4,000 annually per covered employee.

Even if you are 100% healthy it is a good idea to enroll in your employer’s health insurance. Having coverage can shield you from bearing the full financial burden of unexpected medical expenses due to an accident or sudden illness. It also covers the preventative care that helps you remain healthy.

2) Dental and Vision Insurance

 
Many healthcare insurance plans have coverage that is separate from dental and vision care. Thankfully, many employers offer additional insurance.

Most dental plans cover at least two professional cleanings and exams every year. Research shows that over 90% of systemic diseases have oral manifestations. Through regular checkups you dentist may be the first to see signs of diabetes, heart disease, kidney disease, and more.

In most states a dental exam will cost at least $50. However, with additional care like cleaning, x-rays, and fluoride treatment that cost can leap to over $300. Procedures like fillings and orthodontics can be thousands of dollars.

Many employer plan dental premiums are under $20 per month. That is well worth it when that toothache requires a root canal to fix or years of not wearing your retainer leads to needing braces as an adult.

Vision plans are also relatively inexpensive through employer plans and usually cover at least one eye exam and pair of glasses or set of contact lenses every year. Some employer plans even cover Lasik eye surgery.

3) Healthcare Savings Accounts/Flexible Spending Accounts

 
Insurance is definitely helpful when it comes to paying for healthcare expenses, but it does not cover everything. Out of pocket medical, dental, and vision expenses can easily cost a couple thousand dollars every year.

To help employees prepare for these costs many employers offer access to Healthcare Savings Accounts (HSA) and/or Flexible Spending Accounts (FSA). These savings vehicles allow employees to set aside pre-tax money for medical expenses every year.

While this benefit may not initially appear to be worth more money, it is important to remember that reducing taxable income via pre-tax deductions can equal big savings with the IRS. For 2018 the maximum contribution you can make to an HSA is $3,450 for a single coverage plan and $6,900 for a family plan. The max contribution to an FSA is $2,650.

On top of the tax savings, some employers even match employee contributions to an HSA or FSA. Take advantage of free money by enrolling in your company’s healthcare plan and accompanying savings accounts during the next open enrollment period.

Related:

• Why an HSA is the Absolute Best Retirement Account

4) Paid Vacation and Sick Leave

 
There are some jobs that make it difficult to leave the workplace. However, if your employer offers paid vacation and sick days it is worth it to take advantage of the time. According to Project Time Off, a coalition of organizations dedicated to changing the thinking and behavior of Americans about vacation time, U.S. companies recorded roughly $224 billion in unused vacation time.

No matter how busy your profession is, research shows that time away from is good for employee performance. Taking a break prevents burnout, strengthens team bonds, and improves employee morale.

If you are sure your employer cannot survive without you for a week, consider taking your vacation days in smaller increments of two to three days at a time. It is also unnecessary to leave travel far from home in order to have holiday from work. Simply stay home, unplug from e-mail and phone calls and treat yourself to some much needed rest and relaxation. You are getting paid for it.

5) 401K Match

 
The days of working for thirty years then retiring with a hefty pension are reaching an end. More and more employers have shifted the responsibility of retirement saving onto their workers.

However, many employers give their employees’ retirement accounts a boost with matching contributions. It is very common for a company to match employee contributions at $.50 on the dollar up to 5 or 6% of salary.

Independent financial advisory firm Financial Engines found that one in four employees miss out on matching contributions to the tune of $24 billion dollars American workers leave on the table each year.

Although millennials often find it difficult to find the money to save for retirement now, it is important to start as soon as possible to not only take advantage of tax savings and compounding interest, but also to collect free money. Finding ways to increase current contributions by even 1% today can be instrumental in reaching retirement goals.

Related:

• How to Catch Up on Retirement Savings

6) Employee Stock Purchase Plan (ESPP)

 
Do you work for a publicly traded company? Many offer an employee stock purchase plan which allows employees to buy shares at a discount (usually 10-15% depending on the program). Employees can designate post tax dollars be deducted from their payroll checks to purchase this discounted stock.

For example, as an employee you can designate an amount or percentage from your check every pay period. If your company’s stock is trading at $50 a share the ESPP lets you use the post tax money saved to buy it for $45 (assuming a 10% discount). When that stock value rises to $55 per share you’ve made $10 per share while everyone who had to pay market price only made $5.

This is a great way to start investing because not only do you know the company’s potential to do well, you have an added vested interest and role in its performance.

7) Comp Time

 
For those who work more than 40 hours per week some employers offer their workers comp time. Comp time is sometimes provided to salaried employees who do not qualify for overtime.

To give people some form of reward for working long hours, employers offer comp time in the form of additional payment and/or additional vacation time. If you find yourself at the office early and staying late, this could be a great benefit to use to either boost your paycheck or get the extra time off you need to take that bike tour across South America.

8) Education and Training

 
Another benefit to be on the lookout for is tuition reimbursement and education assistance. Many times you do not need to be a student in a degree program to take advantage of this benefit. Often employers also cover the cost of certifications, trainings, workshops, and more. When I was taking standardized tests for grad school admission my employer paid for both an eight week test prep course and my exam.

Be sure to understand any commitments required to use these benefits. Sometimes employers require employees to remain on staff for a specified period of time after the education is complete and paid for.

9) Professional Services

 
Workers have lives outside of work. People buy homes, enter into contracts, start families and more. Many employers understand this and offer free or discounted professional services like real estate agents, attorneys, childcare, and adoption assistance.

These benefits can be extremely lucrative, saving employees tens of thousands of dollars during already expensive life events. Check your benefits to see if there is a group legal, real estate, or accounting plan. It may require a small monthly premium in order to opt in for services, but many who have used the services attest that it is well worth it.

10) Life Insurance

 
Most millennials do not spend much time thinking about their own mortality. Thankfully, many large employers cover their workforce with life insurance. There is often no premium to pay and some companies do not even require employees to opt-in for coverage.

Death benefits can be as high as two times base salary. While this is often not enough coverage for someone with a family, it can be plenty for a single person without dependents. It is important to note that this coverage is often not portable and is only in effect as long as an employee stays with the company.

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11) Discounted products and services

 
Before you sign up for another cell phone service, gym membership, or buy tickets to the newest feature film or amusement park, check your company benefits first. A lot of companies offer perks like employee discounts for fitness clubs, cell phone providers, movie tickets, amusement parks and more.

Receiving these discounts is often as simple as giving your employer’s name when signing up. Others are available through special websites and company contracted ticketing agencies. This can add up to big savings over time, especially if you use a lot of products and services for communication and entertainment.

12) Free Stuff

 
When thinking about their compensation, many employees forget to include employer freebies. It is common for companies to offer their workforce perks like free parking, meals, gym facilities, banking, and more.

Technology companies are notorious for their free cafeterias serving up breakfast, lunch, dinner, and snacks. One well known company even gives employees free professional massage services every quarter.

13) Transportation

 
Unless you work from home, commuting to work is a necessary cost. Thankfully many employers help subsidize this expense in different ways.

Some partner with companies like Wage Works to allow employees to purchase public transportation passes with pre-tax dollars. Others offer reimbursement for mileage if a certain amount of travel is required for the job.

It is very common for sales jobs to come with either a company car benefit (complete with gas and maintenance coverage) or a transportation allowance. Some of these benefits are taxed as income so be sure to keep track of how much you’re driving and for what purposes (i.e. business or personal).

Dive In

 
This list isn’t exhaustive. Companies are always finding new ways to compensate employees for their hard work outside of standard promotions and salary increases. Stay up to date on what’s available to you by visiting your company’s benefits website at least quarterly.

It would also be a good idea to attend HR’s next briefing on company benefits. Who knows? They may even serve free lunch.

 
Related:

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• 8 Things Your Employer Notices About You at Work
• How to Start a Side Hustle, Even if You’re Busy

 
 
What benefits does your employer offer? Are you using all of them? How have your employee benefits added value to your life?
 
 

You might wonder if you will have more opportunity, be better able to pursue your career goals, or have a more professional work environment.

If you participated in your company’s 401(K) plan, you may not have considered what you should do with that money once you leave the company. What are your choices?

When you leave a company, you have a few options as to what to do with your 401(K) plan. We will discuss what those choices are and how to rollover your 401(K) plan if that is what you decide to do.

Option 1: Rollover Your Money Into Your New Employer’s 401(k)

 
If you have accepted a job with a new company who offers an employer sponsored plan, you most likely have the ability to rollover your 401(k).

This is a popular option, especially if your new employer continues to offer a contribution match. By rolling over your retirement account, you might find it easier to manage since it is all located in one spot with your current employer.

Depending on the plan, your new employer’s 401(k) plan may offer more or fewer investment options, so be sure to review what is available to you.

Option 2: Leave Your Money In Your Former Employer’s 401(k) Plan

 
Legally, if you have at least $5,000 in your account, you can keep your account with your previous employer. You will need to ask your previous employer’s 401(k) administrator how long you have to make the decision.

There pros and cons to each. One pro of leaving your money in your former employer’s plan is that it’s easy. You don’t have to do anything. Your former employer’s plan may also offer better or more diverse option than your new employer, so it could be a better fit for your needs.

Conversely, one major disadvantage of staying in your previous employer’s plan is that you could be charged more in maintenance fees. Many companies contribute to the plan fees, but a company is not as likely to cover the plan fees for someone who no longer works there.

Another disadvantage is that you may be limited in your options. Depending on the plan, an employer may even prohibit you from withdrawing money from your investment account until you are retirement age. And if you ever were considering taking a 401(k) loan or hardship withdrawal, your previous plan administrator would be notified, which can be awkward for former employees.

If you choose this option, it’s a good idea to find out all of the rules and details before you leave your job.

Option 3: Move Your Money into an IRA

 
If you want to have the ultimate control over your investments, an IRA could be for you. In an employer sponsored 401(k) plan, the employer decides the rules and picks the investments. Though the company’s 401(k) administrators are required to act on behalf of the plan participants’ best interest, they may not be able to provide as many options as you would like.

By choosing to roll your money into an IRA, you gain more control. With an IRA, you can choose the exact investments you want. You can also have more control over the plan fees, which can save you more money in the long run.

Another notable difference between a 401(k) and an IRA is the freedom to name beneficiaries. By law, the immediate beneficiary of a 401(k) must be your spouse unless you have your spouse sign sign a notarized waiver. With an IRA, you have the freedom to name any beneficiary you would like.

One potential disadvantage of rolling your 401(k) into an IRA is taxes. Taxes will be withheld unless you do what’s called a trustee-to-trustee transfer. You can do this by setting up a new IRA first. Then, ask your previous employer to transfer your money directly into the new account.

Option 4: Cash Out

 
Cashing out of your 401(k) is possible before you are of retirement age, but it’s almost never worth it. There are major tax implications of doing so.

By cashing out of your 401(k), you will owe income taxes on that money. If you’re over the age of 55, you won’t have to pay the penalty for early withdrawal. But everyone else will owe regular income taxes on that amount, which could be around 30%, depending where you live.

This move could even then push you into a higher tax bracket since this disbursement is considered income. Lastly, this move completely destroys any progress you made saving for retirement.

What is the Best Option for You?

 
When most people leave a job, they will either roll that money into their new employer’s retirement plan or they will open an IRA.

Whatever decision you make, you will want to start by talking to your previous employer’s 401(k) administrator and your investment company. They should be able to outline your options for you and point you as to where to go next.

 
Related:

 
 
Have you had to rollover a retirement plan? What did you do when you left a job? How are you saving for retirement if you do not have an employer sponsored plan?