Self Employed Health Insurance
We have always heard that people start a business because of the tax benefits which businesses receive that traditional employees don't have access to. This may mean they are the owners of a sole proprietorship or partners in an S-corporation or partnership. With the 2018 tax code changes, one of these wonderful perks just became even better, but can you take it?
When self-employed people have health insurance costs these costs are taken on their 1040 regardless of if they itemize using Schedule A or not. This can be a large benefit as there are income limits on medical expenses based on adjusted gross income for those who itemize. However, today a client asked my why they were not seeing the income adjustment for their medical expenses they were expecting as I had not listed it on the return where they expected it. I had to explain according to IRS Publication 535 in order to get this adjustment of income listed on their individual tax return the company had to be operating at a profit for the year equal to or greater than the amount that they had paid for the medical insurance