When it comes to tax planning, most people think about deductions and credits during filing season. But some of the most powerful tax-saving opportunities happen long before you file—right in your employee benefits package.
At Nichols & Company CPAs, we believe that smart tax planning starts with everyday decisions. Choosing the right benefits at work can reduce your taxable income, boost your savings, and help you make the most of what you earn. It’s one of the many ways we help make life #LessTaxing.
Understanding the Tax-Smart Benefits You May Already Have
1. Health Savings Accounts (HSAs)
If you’re enrolled in a high-deductible health plan, contributing to an HSA is one of the most tax-efficient moves you can make. Contributions are pre-tax, growth is tax-free, and withdrawals for qualified medical expenses are also tax-free.
2. Flexible Spending Accounts (FSAs)
FSAs allow you to set aside pre-tax dollars for healthcare or dependent care expenses. Just be mindful of the “use it or lose it” rule—these accounts often have a deadline for spending.
3. Retirement Plan Contributions (401(k), 403(b), etc.)
Contributions to traditional retirement plans reduce your taxable income now and grow tax-deferred. If your employer offers a match, that’s free money—and a no-brainer.
4. Commuter Benefits
Some employers offer pre-tax deductions for transit and parking expenses. It’s a small benefit that can add up over time.
5. Group Life and Disability Insurance
While not always tax-deductible, understanding how these benefits are taxed can help you make informed choices about coverage levels and supplemental policies.
Why These Choices Matter
These benefits don’t just help you save on taxes—they also support your long-term financial well-being. Choosing the right mix of benefits can:
- Lower your taxable income
- Increase your take-home pay
- Help you prepare for future expenses
- Reduce financial stress throughout the year
And the best part? These are decisions you can revisit annually during open enrollment, giving you a chance to adjust as your life and goals evolve.
Let’s Make Your Benefits Work Harder
Not sure if you’re making the most of your employer benefits? We’re here to help. Whether you’re reviewing your options for the first time or looking to fine-tune your strategy, our team can walk you through the tax implications and help you make confident, informed choices.
Contact your accountant or simply call our office at 614-891-5423 to schedule a time to talk. Let’s turn your benefits into a smarter tax strategy—and make your financial life #LessTaxing.