Note: This should not be taken as tax or legal advice. Effective yesterday,
new legislation will allow self-employed individuals to deduct their health insurance costs as a business expense for payroll tax purposes. This payroll deduction only applies to 2010 tax returns.
This one-year tax deduction is expected to save self-employed business owners approximately $456 to $968 in taxes this year.
According to the
National Association for the Self-Employed (NASE), self‐employed business owners that meet all of the following requirements can take advantage of this new tax deduction:
- Files an IRS Form 1040 Schedule C tax form or Schedule E with earned income ‐ this includes sole proprietors, single member LLCs, and sole owner S‐Corporations
- Pays self‐employment taxes via IRS Form 1040 Schedule SE
- Pays for individual or family health coverage in 2010
