Getting Tax Deductions For Self-Employed Health Insurance
Jan 9th, 2012
There are several things you can do to take advantage self-employment tax deductions. With enough information, you can maximize your tax deductions. It is nice to learn that the law allows you to deduct the cost of health insurance from your tax payments.
The first step is to find out if you are qualified for the self-employed health insurance deduction. This deduction can be acquired when filing for schedule F or C with the federal tax return. Schedule F pertains to farmers and schedule C includes all self-employed individuals. You may also receive this tax deduction if you have self-employed earnings through a partnership. When you work for an S corporation, you can only avail of the tax deduction if you have at least two percent total stock ownership.
It is important to note that the government has set limits for this type of tax deduction. Before placing your claim, you should accurately calculate the total tax deduction available to you. You don’t have to be an accountant for this one. Determine your annual income first. You can then deduct up to half from this amount. You are also allowed to deduct your retirement contributions from your taxes.
Bear in mind that you cannot request for a health insurance tax deduction when you incur a loss for the fiscal year. Your deductions will be based on your income being a self-employed individual. If you find yourself in this situation, you can make itemized deductions from your tax payment using your health expenses. Consult schedule A for more information.
There are several limits concerning health insurance tax deductions. Being a self-employed individual will allow you to subtract your spouse’s health insurance expenses. You can also do the same for all your dependents. When you are a part of a group health insurance, you cannot get tax deductions. Purchasing your own health insurance will qualify you for this deduction. Employees in your company are not qualified for this deduction.
You will be eligible for this tax deduction even if you are self-employed part time. Take note of all your income and expenses. Having this record will allow you to easily see your eligibility. Have a record of all your health insurance expenses. Keep all your receipts. You may need them in case the IRS audits you. Submit your taxes on time and do not wait until the deadline looms. Take note of every expense you make regarding your health insurance. Be careful when dealing with the details, an error can cost you a lot of money.
Rules may change on a yearly basis, so it is important to verify the tax laws concerning self-employed individuals. Being up to date can save you a lot of money.
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