Important extra tax deduction this year only! (cross-posted)

[Deborah M.]

Your tax person may not know about this.  (Article from L.A. Times business section.)

 

Health Insurance

If you buy health insurance and you're self-employed, there's a new write-off that could save you a serious chunk of change. It allows you to deduct your health insurance premiums against your self-employment taxes.

Health insurance premiums have been deductible against income taxes for years. But this break — valid only for 2010 — allows you to subtract this cost from the income that's subject to Social Security taxes too. That can save roughly 15.3% on your annual health premium cost. So, if you pay $500 a month in premiums, you'll save about $918 in tax.

Unfortunately, figuring out where to claim this deduction isn't easy. Apparently because it's so short-lived, no one bothered to include it on the 1040 or even the IRS Schedule SE, where your Social Security and Medicare taxes are calculated, Luscombe said. You need to write it in on the SE form, putting the cost in brackets on Line 3 to show that you've subtracted it from your otherwise taxable self-employment earnings.

Along the same lines: If you got laid off and received subsidized COBRA health insurance coverage through a former employer but managed to earn more than $125,000 as a single or $250,000 as a married couple for the year, you need to pay the subsidy back. How? Hire a tax accountant. The process is confusing, and you've earned enough to share the wealth. The good news is that tax preparation services are tax deductible.

[Kelli Combs]

Thanks, Deb

 

 

I am forwarding this to my tax guy.  I don't file my taxes till October so I have time.

[Marge Teilhaber (TILE hobber)]

Thanks, Deb.  Just wrote my accountant about this.  Will report back!

[Marge Teilhaber (TILE hobber)]

Here's what I wrote my accountant, who I've known and used for twenty years:

Jeff,

I’m sure you did this but just checking:   Saw this on a court reporting forum:

“If you buy health insurance and you're self-employed, there's a new write-off that could save you a serious chunk of change. It allows you to deduct your health insurance premiums against your self-employment taxes.

Health insurance premiums have been deductible against income taxes for years. But this break — valid only for 2010 — allows you to subtract this cost from the income that's subject to Social Security taxes too. That can save roughly 15.3% on your annual health premium cost. So, if you pay $500 a month in premiums, you'll save about $918 in tax.  Unfortunately, figuring out where to claim this deduction isn't easy. Apparently because it's so short-lived, no one bothered to include it on the 1040 or even the IRS Schedule SE, where your Social Security and Medicare taxes are calculated, Luscombe said. You need to write it in on the SE form, putting the cost in brackets on Line 3 to show that you've subtracted it from your otherwise taxable self-employment earnings.”

marge

 

HIS RESPONSE, which I think indicates he's a little annoyed at my question, which I find curious but whatever:

Marge:

Just to reassure you since you are not sure, your self employed health insurance was deducted from the amount of your business income before calculating the self-employment tax for 2010.

Best regards, 

Jeff

 

Yeah, so Deborah is probably correct:  "I think anyone having their taxes professionaly done is probably okay."

 

 

[Deborah M.]

My sister did my taxes today and it was built into her program; so I think anyone having their taxes professionaly done is probably okay.