Reduce Taxes Using Montana Medical Care Savings Account
Montana residents can save up to $414 per year on their Montana tax bill by contributing to a Montana Medical Care Savings Account (Montana MSA). These accounts are very simple to open at your local bank, credit union, or mutual fund company and are usually self-administered.
You can contribute up to $3,000 per year. If you are married, your spouse can open a separate account and contribute up to $3,000 as well. The amount deposited into your account for a given year determines the deduction from your Montana taxable income for that year. If each spouse contributes the maximum $3,000 and combined Montana taxable income exceeds $16,000, their tax savings will be $414. Any withdrawals used for qualified medical expenses are not taxable. However, withdrawals not used for qualified medical expenses are taxable income to Montana. There is also a 10% penalty unless certain exceptions apply. One of those exceptions is for any withdrawals made on December 31.
Contributions can be made right up through December 31, and the full amount will be deductible. Withdrawals do not have to be used directly to pay medical expenses. It is only required that there be sufficient medical expenses for the year to cover the withdrawal.