If you’re self-employed, you can add a new tax deduction to your 2010 filing, your health insurance premium. Finally, your health coverage can save you money. Sure, health insurance premiums have already been tax deductible for self-employed, so what’s new? Previously, premiums did not reduce the amount you must pay for Medicare and Social Security tax from your total income. For those self-employed, if you subtract the health insurance premiums first, it will reduce your income subject to self-employment tax on your 2010 returns. And that also includes the full premiums you paid for your spouse and children.
“So, for example, if your 2010 income was $80,000 and you paid $10,000 in health insurance premiums, you’ll owe Medicare and Social Security tax on only $70,000.” according to ConsumerReports.
Save money on health? Now that’s what we like.
[…] Now if you are self-employed, 100% of your premiums are tax-deductible and for the first time for the 2010 tax season, so are Medicare contributions, as we previously mentioned. […]