Taxes on Health Insurance Premiums for the Self Employed
How could it be April 15th again already? Do you file a Schedule C or Schedule SE?
A lot of us creative thinkers loathe the parts of our business that involve math or accounting. Some of us even stick our heads in the sand, and just hand off our boxes of receipts, statements, and papers to someone else to figure out. We just say "Here's my stuff, just give me the bill when you're done."
Well, did you know that we self employed pay taxes on our health insurance premiums? We are the only segment of people in business who do.There is a movement to get legislation passed to make a change for this. You can visit the website of the National Association for the Self Employed aka NASE to view an article about it. http://news.nase.org/nase_about/PressRelease.asp?PRID=223
I'm not talking about individual income tax, I'm talking about self employment tax. Self Employment taxes are actually the Social Security and Medicare contributions. We self employed pay 15% of our self employment income. Unlike certain corporations, we are disallowed the deduction of Health Insurance premiums as a business expense. Employees who receive health benefits do not pay taxes on health insurance premiums either.
The self employed do have a place on form 1040 to make a deduction for their health insurance premiums on line 29, however that is after self employment taxes have been calculated on Schedule SE. If you live in a state like NJ, your self employment taxes on health insurance premiums alone could total around $2500.00 - $3000.00 in taxes! Here is another interesting article: http://cincinnati.bizjournals.com/cincinnati/stories/2007/10/15/story18.html.
If you want to learn more, just click around and Google for other articles regarding this subject.
Disclaimer- I am not a tax expert, so be sure to consult your tax professional regarding any information you read from me or any other non-tax professional. To my knowledge, as of tax year ending 2007, this information is correct.
A lot of us creative thinkers loathe the parts of our business that involve math or accounting. Some of us even stick our heads in the sand, and just hand off our boxes of receipts, statements, and papers to someone else to figure out. We just say "Here's my stuff, just give me the bill when you're done."
Well, did you know that we self employed pay taxes on our health insurance premiums? We are the only segment of people in business who do.There is a movement to get legislation passed to make a change for this. You can visit the website of the National Association for the Self Employed aka NASE to view an article about it. http://news.nase.org/nase_about/PressRelease.asp?PRID=223
I'm not talking about individual income tax, I'm talking about self employment tax. Self Employment taxes are actually the Social Security and Medicare contributions. We self employed pay 15% of our self employment income. Unlike certain corporations, we are disallowed the deduction of Health Insurance premiums as a business expense. Employees who receive health benefits do not pay taxes on health insurance premiums either.
The self employed do have a place on form 1040 to make a deduction for their health insurance premiums on line 29, however that is after self employment taxes have been calculated on Schedule SE. If you live in a state like NJ, your self employment taxes on health insurance premiums alone could total around $2500.00 - $3000.00 in taxes! Here is another interesting article: http://cincinnati.bizjournals.com/cincinnati/stories/2007/10/15/story18.html.
If you want to learn more, just click around and Google for other articles regarding this subject.
Disclaimer- I am not a tax expert, so be sure to consult your tax professional regarding any information you read from me or any other non-tax professional. To my knowledge, as of tax year ending 2007, this information is correct.
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