Compare Health Insurance Tax Breaks

Income taxIn the Fox Business section online, George Saenz was asked if sole proprietors can deduct their health insurance costs on their taxes.  The article, “Deduct Health Insurance Premium?,” explains that while the deduction is available, it is not so easy to find.  When you compare health insurance tax breaks, the Small Business Jobs Act that was passed last September is really beneficial to small business owners.  It is aimed at bringing their health insurance costs in line with those of large businesses that have corporate-sponsored plans.

Those who own small businesses already have a disadvantage when shopping for health insurance from companies like Aultcare since they have fewer employees than large companies.  In addition to that, they were paying an additional 15% tax on their health insurance.  Now small business owners who file a Schedule C can get a tax break thanks to the Small Business Jobs Act.  They are able to decrease their self-employment income by the deductible health insurance premiums that they paid during the year.  Partnerships with partnership-sponsored health coverage are also affected by this new law.

The cost of your health insurance coverage is still reported on line 29 of your 1040 tax form.  You want to deduct that amount on line 3 of the Schedule SE Section B to get your tax break.  The Internal Revenue Service adjusted the Schedule SE to account for this new change.  This can make a big difference in self-employed workers, especially those with businesses making a net income of $100,000 or more.

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