Hello, I am not an expert on this stuff and have spent hours trying to look up these laws and talking to various experts on this and everyone seems to be a bit stumped...
I generally earn approximately 20-30k in 1099 income which is not taxed. Historically, I end up owing quite a bit of taxes each year. I am setting money aside for taxes/making quarterly payments based on my estimates of my anticipated income, but I'm hoping to lower my overall tax burden by decreasing my taxable income. Some relevant background info: We are pregnant and expecting our baby before the end of the year. I have lots of student loan debt (~90k) that I am trying to pay off as quickly as possible. I recently revived an HSA account that a few hundred bucks in it from my previous employer (my current employer's plan does qualify as a HDHP per IRS).
Here is my plan:
-maximally fund HSA with post tax contribution (it seems my HSA allows pre and post tax contribution), then use those funds to pay medical expenses we accrue this year
-open up 529 plan under my own name, fund it with $10,000, then use the funds in the 529 to pay student loan (it seems this is a qualified education expense per SECURE Act) eventually transfer 529 to child or close 529. I realize this will have no impact on my federal income tax, but the state I am in does seem to allow a deduction up to that value. I'm not worried about not being able to claim $2500 or whatever it is in interest since there has been no interest accrual during COVID forbearance
-I am prioritizing paying off the loan as quickly as possible, paying all of the medical expenses we accrue this year, as well as lowering my overall tax burden so I owe less come next April
Essentially, I'm using money I already have set aside for these purposes and funneling them through a vehicle for the express purpose of lowering taxable income. I realize this is convoluted. I think contributing to Roth would help, but I don't feel comfortable doing that right now since I need those funds to help cover living expenses and emergency fund, so this plan allows me to use money I already have earmarked, but also allows me to get a slight tax benefit?
Questions:
1. Does funding HSA post tax lower my taxable income (similar to how a Roth IRA might work)?
2. Does this all check out? Am I missing something or misunderstanding something? I have talked to different tax experts and they were stumped
Thanks!
