Family Formation & Housing

For young couples starting families, buying their first home and/or other real estate. Covers mortgages, credit cards, interest rates, children’s education savings plans, joint accounts for couples and the like.

8 Employee Education tips on Health Savings Accounts

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Health Savings Accounts (HSAs) are often a foreign concept when employers offer them to employees. What should employees know – or ask – about a Health Savings Account offered as a part of an employer’s benefit plan? 

To create this article, we posed that question to employers, employees, and financial services professionals. The focus here is on the United States: An HSA is a type of medical savings account available to taxpayers strictly in the United States who are enrolled in high-deductible medical insurance plans.

Here are eight employee education tips for health savings accounts: 

  • Understand Your Options
  • Analyze your Past Records
  • Focus on Interest Rates and Penalties
  • Understand Your Health Care Needs
  • Research Specialized Service Coverage
  • HSAs Aren’t For Everyone
  • Tax Advantages
  • Other Health Insurance Are Not Allowed Under an HSA

Let’s dive deeper into each education tip offered by employers and financial service professionals.

Understand your options

The first thing to do is understand what a health savings account is. Do your research until you know your options and then understand your options. The golden key here is knowledge. You should never make major decisions without fully understanding what it is you are dealing with. — Ken Chipman, Arrow Lift

Analyze your past records

You should know that Health Savings Accounts aren’t for everyone. Gather all your records and decide if it is something you need rather than something you want to get just because it is being offered. Understanding benefit plans is tricky, but take the time to look through everything. Don’t just go with what everyone else is doing. — Peter L. Babinski, Stomadent Dental Lab 

Focus on Interest Rates and Penalties

Employees should focus on things like interest rate, if the money is pre-taxed and if there is a penalty for early withdrawal. Interest rates often get overlooked, but over time they make a huge difference in the amount of money that is accumulated. Employees should also be aware of the taxing process as well as their options should they need to withdraw the money early. — Ryan Nouis, TruPath 

Understand your Health Care needs 

Like any health care option, a Health Savings Account has its pros and cons. Evaluate your healthcare needs and your budget for the next year. Someone young and healthy will most likely view an HSA as an attractive choice. Someone not as healthy with expensive medical care needs might forego the HSA option. It’s all about doing what’s best for you and your situation and taking advantage of the benefits an HSA has to offer you. — Kayla Centeno, Markitors 

Research specialized Service Coverage

Many employees want to know if they can use their health savings account (HSA) to pay for dental implants. The answer is that in most cases, dentures are eligible for reimbursement with an HSA plan. Dentures may also be eligible for reimbursements through a flexible spending account (FSA), a health reimbursement arrangement (HRA) and a limited care flexible spending account (LCFSA). The plan where dentures are often not eligible for reimbursement is a dependent care flexible spending account (DCFSA). When in doubt, always check with your insurance carrier to get a more personalized answer. — Henry Babichenko, DD, European Denture Center

They aren’t for everyone

These accounts don’t make sense for everyone, but are really great for individuals and families with predicted medical expenses above their deductibles. If you know that you will outspend your deductible this year, then I highly recommend an HSA. — Anna Caldwell, Accredited Debt Relief

Tax advantages

Young and healthy employees should really look into the triple-tax-advantage of HSAs as a long-term financial planning vehicle. Continue Reading…

A new blog series on Covid’s impact on housing and mortgages

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The BBC Storyworks site in Canada has launched a 6-part series written by me about Covid-19 and the impact on housing and the mortgage industry. The articles will appear weekly, starting this week. Later articles will look at mortgage options, the investing experience following Covid, optimum investment strategies going forward and close with retirement strategies in the age of Covid.

The first article went up on Thursday and covers how the Work-from-Home phenomenon has impacted where we all live and work. You can find the full piece by clicking on the highlighted headline here: Rethinking Home Base. The series is sponsored by TD Bank.

Working from home is now mainstream, whether temporarily for those still employed, or as a more enduring shift to home-based self-employment. Many technology companies now let employees work from home: some until 2021, some permanently.

“Covid-19 shaped the real estate market during the second quarter in every possible way,” says Phil Soper, president and CEO of Royal Lepage. Its latest housing survey showed home prices rising sharply, with supply struggling to keep up with a surge in demand: “As the reality of extended and potentially permanent work-from-home employment sunk in, people pondered both the location and size of their homes,” he said in a release on the survey, “Simply put, larger homes in smaller communities have become more fashionable.”

Many urban homeowners are selling their expensive city homes and swapping them for bigger places in the suburbs or cottage country. Not surprisingly, and as Reuters recently reported, there’s a severe glut of office space in New York City. Many REITs with heavy exposure to offices and malls have been hard hit.

Consumer spending patterns changing too

Covid has changed consumer spending patterns, with less eating out and reduced need for new clothes for the office. Meanwhile, cooped-up homeowners are landscaping back yards, and adding pools and decks. These home-based workers are upgrading computers and office equipment, upgrading smartphones, adding peripherals from Logitech or HP Inc., trekking to Home Depot to retrofit workspaces and ordering furniture online from RH or Wayfair. They stay in touch with customers through technologies like Zoom or Skype. They collaborate with remote co-workers through Slack or Microsoft Teams. They close deals with electronic signatures from firms like DocuSign, while medical professionals consult via telemedicine tools like Teladoc.

Cottage country booming

Cottage country is experiencing a massive sales boom. The story says veteran Collingwood realtor Karen Willison is swamped with business from urban refugees. Far from creating bargains, Covid has elevated home prices across the board, especially those with waterfront.

New retirees figure prominently: Pre-Covid some clients who thought they’d retire in two years are speeding up plans. We’ll look at this aspect more later in the series.

 

6 ways to save money by upgrading your Place of Business

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Photo: Pexels-Pixabay

By Sia Hasan

Special to the Financial Independence Hub

No one likes the sting of putting out money for building repairs, but if your initial investment could save you hundreds, maybe thousands of dollars, it’s well-worth the momentary pain. These same upgrades will also help you avoid costly damage that would end up making a bad situation even worse. If you’re the owner of a business or company, here are six commercial upgrades that could keep you in the green.

Get into hot water

Most people try to stay out of hot water, but the fact is that everyone needs it and it can get expensive if your heater isn’t efficient. When your hot water tank is old, rusty or leaking, don’t try to squeak by for another year. For example, if you live in California, contacting a water heater company in Granada Hills and changing out that old tank, or selecting a newer “tankless” system, will start saving you money right away. Once you’ve got a new tank in, always remember to keep the water temperature just hot enough and never on the highest setting, and you’ll see the difference in your bill.

Change out your bulbs

Changing out your company’s lighting is the easiest tip you probably never thought of. In a place of business, lights are in use all day, every day, so why not save every penny you can? Switching your regular incandescent bulbs to energy-saving LED bulbs will use 75% less energy. They also last 25 times longer than regular bulbs! In a building where the lights are on all day and possibly all night, switching to LEDs will save you significant money.

Weatherize the Building

Just like you save energy at home, you should do the same at your workplace and weatherization is just the ticket. For example, you know that drafty area everyone complains about? That’s hard-earned money going right out the window. Before you lose any more, now’s the time to seal up or replace those loose fitting windows and doors, making the building attractive as well as efficient. If your office gets extremely cold during chilly days, consider brand new insulation or adding to what you already have.

Take advantage of the Sun

More and more businesses are deciding to harness the energy of the sun to help with costs. Using solar power can greatly reduce your electric bill, but is most compatible with larger establishments that have the space to install an adequate size system. Continue Reading…

The Ups and Downs of passing your Home down to Family

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By Holly Welles

Special to the Financial Independence Hub

You’ve recently encountered an important decision. Should you pass down your home to your family? Many people make this choice before weighing a few pros and cons. It’s essential to examine this situation from every angle. Otherwise, you may create an unnecessary and unwelcome problem for you and your loved ones.

Here’s a look at whether you should pass down your property:

1. )You could redistribute your Wealth

Here’s a central reason why individuals decide to pursue this process. While houses themselves don’t always appreciate, your land has likely accrued value over time: and your family can benefit as a result. That occurs because land as a commodity isn’t readily available. Many homeowners don’t own any assets more expensive than their houses. You can ensure your family gains more wealth by giving them your residence.

They’ll likely thrive financially if they take specific actions. For instance, they could sell your home to create a monetary cushion. They may even want to move from their current residence to reduce their expenses. In some cases, it’s smart to pass down your house so you can assist them in managing finances.

2.) You may cause issues between Heirs

It’s not guaranteed whether your heirs will find a way to manage this transaction. Various concerns may arise between them. It could create jealousy if you trust your home to one sibling or child. But if you divide your home amongst multiple heirs, disagreements over ownership can still happen. You may cause more problems than you originally anticipated.

You’ll also want to consider what may occur if you’re alive while this process takes place. You may have to face a few different scenarios that create difficulties for you personally. Make sure to choose a method that protects you. It’s always best to think about your interests, too. If you move forward with this transaction, take steps to resolve issues that may occur after you pass.

3.) You can downsize to a smaller place

As you age, it’s often harder to care for a large home. That’s why many older adults tend to downsize into a rental community. They don’t have to deal with the costly maintenance that tends to come with more expansive space. It may also be a more immediate experience for some families:  if you have unexpected health issues that don’t allow you to climb steps, it’s likely time to find a home without an upstairs level. Continue Reading…

Educating your Canadian children in the United States (Part 1)

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Princeton University

By Elena Hanson

Special to the Financial Independence Hub

Congratulations! You are sending your son or daughter to college in the United States to further their education and help put them on the road to a great career. But have you as the parent done your due diligence to make sure this doesn’t end badly with a big chunk of money ending up in the hands of the IRS? It could happen.

The IRS has long arms and extensive resources, and once it starts examining the earnings and assets of your child who is attending a U.S. school, well, as the saying goes all is fair in love and war. What’s more, the IRS might even wind up investigating the finances and assets of the whole family!

How do you avoid a muddle with the IRS? Good, sound, cross-border tax planning. That’s how. It will protect the income and assets of your child, and of you, and ensure full compliance in Canada and the U.S.

Start with the Visa

Let’s go to the beginning. Your son or daughter has been accepted for admission to the U.S. university or college of their choice, which means they have an F-1 Student Visa or a J-1 Exchange Visitor Visa. All the necessary documentation is complete and there is nothing to worry about.

Well, not exactly. As Canadians you better be up to snuff on all the rules for your child to attend school south of the border or Uncle Sam might have the last laugh, and here’s why. The moment Bobby or Jennifer sets foot in the U.S. the IRS day-counter gets rolling. They keep tabs on the number of days your child is in the country and this is why you, the parent, must do everything to make sure your Canadian child retains their status as a non-resident alien.

Tax residency in the U.S. is based on citizenship/lawful permanent residence (i.e., Green Card) and/or the Substantial Presence test (i.e., days present in the U.S.). This means that if your son or daughter is not a U.S. citizen or a Green Card holder, they will likely meet the criteria for the Substantial Presence test, which is calculated based on the number of days spent in the country over a three-year period. So, if your child’s magic number is 183 days or more, they are considered a U.S. tax resident.

Key is avoiding U.S. residency status

Thus, avoiding U.S. residency status is key and you can do that by filling out a form: Form 8843, which is called ‘Statement for Exempt Individuals.’ It allows students to exclude the number of days they are present in the U.S. for purposes of the Substantial Presence test. But the student must avoid any activities that disqualify this exemption. That could be looking for a job or buying a home in the U.S., or marrying a U.S. person.

If the student has a home in Canada and actively maintains it, but they do not qualify for the exemption as per Form 8843, they can still avoid U.S. taxation on their worldwide income and those IRS filings because of the Canada-US Income Tax Convention (the Treaty). And even if your child is not able to maintain their non-resident status, being aware of a few important things can be a big help.

It all has to do with good tax planning. Here are some examples: Continue Reading…