Must-Know Tax Tips

Healthcare
What’s New for Small and Medium Business Owners

 

Here is the tax news you need to know by the filing deadline for your 2011 taxes, April 17.

That’s right: April 17. You get two extra days, because April 15 falls on a Sunday this year, and the following day is a holiday, Emancipation Day, in Washington D.C.

That’s not all the news, of course. This article can’t save you a trip to a professional tax adviser. But it can alert you to a few issues of particular importance to small and medium business owners, and other self-employed professionals.

Some of it is good news, too, and that’s always worth getting.

Deducting Your Health Insurance Costs
If you are self-employed, you may be eligible to deduct the health insurance premiums you pay for yourself and your family.

Best of all, this is an “above-the-line” deduction. That is, it comes off your adjusted gross income, dollar for dollar. It can save you a bundle.

The deduction goes right on Form 1040, line 29.

If you overlooked this deduction in previous years, it may be worthwhile having your accountant go through your past returns back to 2008 and prepare amended returns, so you can get that money back, too.

The insurance has to be in your name or your company’s name. You can’t claim the deduction if you are eligible for coverage in some other way, such as through your spouse’s plan.

IRS Publication 535 explains the health insurance deduction in detail.

Saving On Employee Health Coverage
Part of the Affordable Health Care Act (the “ObamaCare” law that has been so hotly debated) has now kicked in, and it may help you provide health insurance to employees of your business.

Here are the basics: If you have fewer than 25 full-time employees (or their equivalent in total hours worked), and their annual wages are under $50,000, and you pay at least half of the cost of their health insurance, you’re eligible for a 35% tax credit on the 2011 costs of the coverage.

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