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Tax Law (Questions About Taxes)/Self-Employed Health Insurance Deduction

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Question
I am self employed and have my own health insurance. My wife was unemployed and on COBRA all of 2012. She helps greatly with my business but we are not technically business partners (although we could establish that at any time).

Do you know if the IRS self-employed health insurance deduction is disallowed for my wife's premiums because we had separate policies? COBRA is not employer subsidized and my business is profitable so I'm fine there.

IRS form 535 says, "For self­ employed individuals filing a Schedule C, C­EZ, or F, a policy can be ei­ther in the name of the business or in the name of the individual."

It doesn't specify anything about separate policies.

Answer
The health insurance deduction is not limited to the self employed.

Your wife may be able to reduce your taxes by a portion of the premiums that she has paid in.

The Health insurance deduction is simply an extension of the itemized deductions. This is the same place that you would account for your medical insurance.

But I believe your medical expenses must exceed 7.5% of your adjusted gross revenue to be eligible to deduct the rest. For most of the Americans, less than 2.0% of 1040 tax returns are eligible for a medical deduction.

Can I read between your lines?

You are profitable and you are accounting for your business on your 1040 tax return. That means you are paying the highest possible taxes to be in business.

You are not being able to deduct all of your business expenses. Your Medical expenses is but one example.

There are better ways.

Richard Fritzler
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Tax Law (Questions About Taxes)

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Richard Fritzler

Expertise

Specializing in Business and Corporate taxation. Comparing the advantages and requirements of different business entities, such as Sub-S Corporations, LLC`s, Partnerships (Both Limited and General), Doing Business as a Sole Proprietor, or Using a C-Corporation. Issues regarding K-1 distributions, 1040, schedule C, 1120, 1120s. Are you considering domiciling a Corporation in a low tax state? I can review the benefits and misinformation that exists.

Experience

I have been in the business of assisting business owners in reducing their taxes and liability since 1986.

Organizations
National Small Business Owners Association.
Publications
Contributing author to "The Corporate Standard Newsletter".


Publications
Contributing author to "The Corporate Standard Newsletter".
Ezinearticles.com articlesbase.com

Education/Credentials
I have been in the business of assisting business owners in reducing their taxes and liability since 1986.

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