Health Ins Premiums: tax deductible?

[Guest]

I am moving into individual health and am coming across this question:

Is there a tax advantage if I choose a group plan over individual plans for my small business?

In other words, are health ins premiums tax deductible whether they are group or individual for small business owners?

 

[arnguy]

Yes.

 

[Guest]

I'm sorry this thread has a ten word minimum response requirement

 

[Crabcake Johnny]

If you're a business owner with your own individual plan the premiums are tax deductible off your federal taxes.

 

[Guest]

nice. thank you both.

 

[BKrocko]

The best answer is to check with your financial advisor.

 

[newmindfashion]

According to something I read on the IRS web site a while ago and an attorney I spoke with, the health insurance deduction is only applicable when the health insurance is established in the name of the company (Group policy) and not just paid for by the company.

BKrocko is correct, check with your accountant and financial advisor.

 

[arnguy]

Sorry for the one word reply. The following is the Gospel according to the Internal Revenue Code, Title 26, Subtitle A, Chapter1, Subchapter B,
Part VI, Sec. 162 - Trade or Business Expenses. I assumed that your prospect is a self-employed individual.

(l) Special rules for health insurance costs of self-employed individuals
(1) Allowance of deduction (A) In general In the case of an individual who is an employee within the meaning of section 401 (c)(1), there shall be allowed as a deduction under this section an amount equal to the applicable percentage of the amount paid during the taxable year for insurance which constitutes medical care for the taxpayer, his spouse, and dependents.

(B) Applicable percentage For purposes of subparagraph (A), the applicable percentage shall be determined under the following table:

For taxable years beginning in calendar year— The applicable percentage is—
1999 through 2001 60
2002 70
2003 and thereafter 100
(My italics)
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The following is Sec. 401(c)(1)(A)(B)(i)(ii) of the Internal Revenue Code:

(1) Self-employed individual treated as employee (A) In general The term “employee” includes, for any taxable year, an individual who is a self-employed individual for such taxable year.

(B) Self-employed individual The term “self-employed individual” means, with respect to any taxable year, an individual who has earned income (as defined in paragraph (2)) for such taxable year. To the extent provided in regulations prescribed by the Secretary, such term also includes, for any taxable year—
(i) an individual who would be a self-employed individual within the meaning of the preceding sentence but for the fact that the trade or business carried on by such individual did not have net profits for the taxable year, and
(ii) an individual who has been a self-employed individual within the meaning of the preceding sentence for any prior taxable year.

I hope this clarifies things.

 

[somarco]

Schedule C

Self-employed health insurance deduction.http://www.irs.gov/publications/p334/ch08.html#d0e6205http://www.irs.gov/publications/p334/ch08.html#d0e6205http://www.irs.gov/publications/p334/ch08.html#d0e6205 You may be able to deduct the amount you paid for medical and dental insurance and qualified long-term care insurance for you and your family.

How to figure the deduction. Generally, you can use the worksheet in the Form 1040 instructions to figure your deduction. However, if any of the following apply, you must use the worksheet in chapter 7 of Publication 535.

1040 instructions

If you want to give clients tax advice, you might want to put your assets in a trust for safe keeping while you are away in lock up.

 

[Crabcake Johnny]

All I know is my taxes are done in my name, not my business, I've always taken the health insurance deductible off my schedule C and we had an accountant do our taxes for the 1st two years I was in this business and he signed off on the return.