I was just wondering, alot of people just coming out of college have huge amount of debt and arent ready to start contributing to a IRA or a retirement plan but we have huge amounts of debt, is there a way we can divert money into a plan to help us pay off our debt faster that is tax free? similar to the way you can divert money into a tax free investment/retirement?
2007-12-16 05:12:06 · 4 answers · asked by Drew W 2 in Business & Finance ➔ Taxes ➔ United States
No.
2007-12-16 05:27:50 · answer #1 · answered by Anonymous · 2⤊ 0⤋
Not directly. However, if you expect to acquire medical debt in the future (this does not help with existing debt), you may be able to make pre-tax contributions to an HSA or FSA before the medical expenses happen, and later use the contributed money, tax-free, to pay the medical bills.
Also, there are the following tax advantages to paying off your debt:
1. You avoid being taxed on "forgiven debt" (unpaid debt that must be included in taxable income).
2. You will be better able to qualify to obtain a mortgage, which allows you to deduct the interest on the mortgage and the real estate taxes on the property that you buy.
2007-12-16 06:53:12 · answer #2 · answered by StephenWeinstein 7 · 0⤊ 1⤋
Don't I wish! Sorry, no, that's not possible under current laws.
2007-12-16 05:46:00 · answer #3 · answered by Bostonian In MO 7 · 1⤊ 0⤋
No, there isn't anything like that available.
2007-12-16 15:59:50 · answer #4 · answered by Judy 7 · 0⤊ 0⤋