Saturday, July 30, 2011

I have the option to have my health insurance taken out of my check pre tax or post tax?

What does that mean and which one will leave me with the most take home pay at the end of the week
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Take the pre tax option. That portion of the check is not taxable income which puts you in a lower tax bracket and saves you from paying income tax on that portion of your check. If you make $50,000 per year and pay $5000 in health insurance you will only be taxed on $45,000 at year end (not including your other deductions.) The only time you should consider taking post tax (taxes are taken from your check before you pay for health insurance) is if you plan on collecting at the end of the year. Go with pre tax option.
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