Northeast Philadelphia Tax Preparation Services Newsletters - Summer 2011

GROUP URGES EXTENSION OF HEALTH INSURANCE DEDUCTIONS FOR THE SELF-EMPLOYED

If you are self-employed, you were able to deduct premiums paid for medical and dental insurance for you, your spouse, and your dependents from your 2010 self-employment taxes. This tax break was seen as leveling the playing field between self-employed taxpayers and payroll employees, who get an exclusion for premiums paid under employer-funded health insurance plans. The problem is, this tax benefit expired at the end of 2010 and it is unclear whether Congress will extend it.

In preparing your small business tax returns, the deduction was available to the following taxpayers, for insurance plans established under their businesses:

   * A self-employed individual with a net profit reported on Schedule C (Form 1040), Profit or Loss From Business, Schedule C-EZ (Form 1040), Net Profit From Business, or Schedule F (Form 1040), Profit or Loss From Farming.

   * A partner with net earnings from self-employment reported on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits.

   * A shareholder owning more than 2% of the outstanding stock of an S corporation with wages from the corporation reported on Form W-2, Wage and Tax Statement.

The National Association for the Self-Employed (NASE), a nonprofit trade group based in Washington, D.C., has asked Congress to make the deduction permanent, or at least extend it for two years. Testifying before the Senate Committee on Small Business & Entrepreneurship in May 2011, Kristie L. Arslan, Executive Director of NASE, stated that, “It is imperative that the 22 million self-employed Americans receive the same tax treatment of health care costs as all other businesses.” The testimony explained that the one-year deduction saved self-employed business owners approximately $456.71 to $968.14 in taxes.

Outlook: Even though it is getting too close to elections for Congress and the Administration to do much of anything, small business tax relief generally has bipartisan support. If there is any kind of tax bill passed this year, a short extension of the self-employed health insurance deduction may make it into the final legislation. To keep abreast with all the allowable tax deductions for your Northern Liberties Philadelphia Tax Accountant, please do not hesitate in contacting a local Northern Liberties Philadelphia Tax Accountant at 215-667-8839.

In preparing your small business tax return for your Northeast Philadelphia Small Business, please do not hesitate in contacting your Northeast Philadelphia Tax Accountants at 215-667-8839. We proudly provide accounting and tax preparation to small businesses in Northeast Philadelphia.