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Small Business Employee Benefits and HR Blog

Health Insurance Payroll Tax Deduction Allowed for Self-Employed Individuals

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

Click here to read the full summary from the NASE website. 

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