Health Insurance And The IRS
Oct 2nd, 2009
Freelance writers, photographers, artists and other self-employed individuals and small business entrepreneurs qualify for a valuable tax break on what they are currently spending for medical health insurance coverage. The self-employed and small business entrepreneur needs to reminder that the cost of medical insurance keeps climbing. Worse yet, you have to absorb more of the health premium cost because so many charges are not covered by your insurance.
Unfortunately, this usually fails to measure up to a deductible size in the view of the IRS: As you laboriously list your itemized expenses on Schedule A of Form 1040, you will find that the only expenditures deemed allowable are those exceeding 7.5% of your Adjusted Gross Income or AGI, the figure on the last line of page one of the 1040 form. However, the self-employed and the small business entrepreneur are able to deduct 100% of their low cost health insurance premiums for themselves and their spouses and dependents without any regard to that 7.5% allowable threshold.
- Self-employed individuals and small business entrepreneurs whether they operate their businesses or professions as sole proprietorships, partnerships, or limited liability companies do qualify to now take the deduction annually.
- The S corporation shareholders owning more than 2% of the stock are eligible. S corporations are institutions, taxed much the same way as partnerships are, that pass profits through to their shareholders.
This deduction for the annual affordable health insurance for self-employed individuals and small business proprietors is not subject to the 7.5% threshold for all other medical expenditures. This mean the deduction avoids the Schedule A, where expenses are itemized, but is on the first page line 29 of the Form 1040. The self-employed and small business medical insurance deduction is available even to someone who foregoes itemizing altogether and instead simply uses the standard
The amount you deduct for insurance coverage do not reduce self-employment income when filling Schedule SE or Self-Employment Tax of Form 1040 to compute the net earnings minus the health insurance deductible from self-employment. The computation on that schedule is strictly on Schedule C, on which you report your self-employment receipts and expenses to arrive at a net profit. This is just one example of how the federal laws have evolved over the years. Only a few years ago the self-employed and the small business proprietor were absorbing the total annual cost for medical insurance premium coverage, whereas today they are able to deduct the cost.
Related posts from our blog:
No related posts.
Tags: affordable health insurance | disability health insurance | disability healthcare coverage | health insurance | low-cost insurance policy | medical health insurance coverage | medical health insurance policy | medical healthcare coverage | medical healthcare policy | news
Posted in: Anne Cuenca | Comments Off