Hallelujah!
Apr. 9th, 2011 12:10 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
gerisullivanForm 1040 (Schedule SE)
Line 3 (Short of Long Schedule SE)
For 2010, you can reduce your net self-employment income by the amount of your self-employed health insurance deduction entered on line 29 of Form 1040....
I thoroughly appreciated it years ago when the tax laws changed to allow self-employed people to deduct the cost of health insurance from our income. It took a few years for the deduction to reach 100% at both the federal and state level, but it's been there for quite a while now.
There's only been one problem -- the deduction goes on Form 1040, so I've been paying self-employment taxes on the cost of my health insurance since 1990. "Self-employment tax" as in the full Social Security tax, not the 50% of the tax that employed people pay while their employers pay the other half, the whole "multiply net profit from Schedule C by .9235 then multiply the result by .153 and send us the money" tax.
Yes, I've always been saved from paying income taxes on half of my self-employment tax, but paying what works out to be 14.13% tax on health insurance premiums that cost considerably more than employed folks pay for their insurance has been a harsh "gotcha."
It's apparently just a one year provision, part of the Small Business Jobs Act of 2010. Who knows what next year will bring. But for this year? Wow. It's making a considerable difference in my current financial situation.
Why, yes, as it just so happens, I am working on my taxes. 'Cause I knew you'd never guess....
Line 3 (Short of Long Schedule SE)
For 2010, you can reduce your net self-employment income by the amount of your self-employed health insurance deduction entered on line 29 of Form 1040....
I thoroughly appreciated it years ago when the tax laws changed to allow self-employed people to deduct the cost of health insurance from our income. It took a few years for the deduction to reach 100% at both the federal and state level, but it's been there for quite a while now.
There's only been one problem -- the deduction goes on Form 1040, so I've been paying self-employment taxes on the cost of my health insurance since 1990. "Self-employment tax" as in the full Social Security tax, not the 50% of the tax that employed people pay while their employers pay the other half, the whole "multiply net profit from Schedule C by .9235 then multiply the result by .153 and send us the money" tax.
Yes, I've always been saved from paying income taxes on half of my self-employment tax, but paying what works out to be 14.13% tax on health insurance premiums that cost considerably more than employed folks pay for their insurance has been a harsh "gotcha."
It's apparently just a one year provision, part of the Small Business Jobs Act of 2010. Who knows what next year will bring. But for this year? Wow. It's making a considerable difference in my current financial situation.
Why, yes, as it just so happens, I am working on my taxes. 'Cause I knew you'd never guess....
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no subject
Date: 2011-04-09 04:49 am (UTC)