You should read this

[Pope Flick]

The way I read the post about the deductibility was that it was reference into health ins. premiums, which are not deductible by individuals.

 

 

 

Gotcha, although I do think premiums are included in the health care cost total and that it isn't limited to only out of pocket expenses.

[westvirginia]

The way I read the post about the deductibility was that it was reference into health ins. premiums, which are not deductible by individuals.

 

That's what I was reading too. That's something I was saying about this stupid "reform" bill. You make it so PEOPLE can get the same tax breaks as business for insurance premiums, and you sever the work/insurance connection and create the opportunity for more tailored plans (like swammi saying he didn't need maternity/mental health/substance abuse coverage) and more competition, forcing costs down. That's the number one thing that should have been done, but that gives power to citizens, not fedgov...

[i_am_the_swammi]

Not under current law they aren't.

 

Self-employed workers' insurance premiums are indeed tax deductible. My premiums have been deducted for years.

 

I may be mistaken, but all anyone needs to do is file a business return...even if tat business nets $0.

h

[westvirginia]

Self-employed workers' insurance premiums are indeed tax deductible. My premiums have been deducted for years.

 

I may be mistaken, but all anyone needs to do is file a business return...even if tat business nets $0.

h

 

That would be tax evasion.

[i_am_the_swammi]

That would be tax evasion.

 

Perhaps you should tell mt accountant and the IRS that. Seems they don't beleive so. Unless my my returns for the last 9 years of working independantly are not correct.

 

Oh wait...never mind....its you thats wrong again:

 

IRS Publication 502 clearly states that medical insurance premiums are a medical expense eligible for deduction as an itemized deduction subject to reduction by 7.5 percent of your adjusted gross income, or AGI. The publication states:

 

You can include in medical expenses insurance premiums you pay for policies that cover medical care. Policies can provide payment for:

 

•Hospitalization, surgical fees, X-rays, etc.

•Prescription drugs

•Replacement of lost or damaged contact lenses

•Membership in an association that gives cooperative or so-called "free-choice" medical service, or group hospitalization and clinical care

•Qualified long-term care insurance contracts.

You cannot include premiums you pay for:

 

•Life insurance policies

•Policies providing payment for loss of earnings (disability insurance)

•Policies for loss of life, limb, sight, etc.

•Policies that pay you a guaranteed amount each week for a stated number of weeks if you are hospitalized for sickness or injury

 

Since this is pretty basic stuff, I'm going to assume that there are maybe some facts that you did not describe to me but that your adviser is aware of. Your deduction may or may not be allowed depending on how you pay for your health insurance. If you're an employee and your health insurance premiums are paid under a cafeteria-plan arrangement, then these are pretax dollars and would not count as a medical expense in reaching the 7.5 percent of AGI. In other words, since the medical premiums paid under a cafeteria plan are not considered wages to you (they are not included in your Form W-2), you can't double dip by claiming a deduction.

 

Alternatively, if you're self-employed or a shareholder in an S corporation, or partner in a partnership, the medical insurance premiums should be claimed as an adjustment to gross income on Line 29 of Form 1040. This treatment is more beneficial than claiming the medical insurance premiums as an itemized medical expense deduction.

 

If the exceptions above do not apply, then I suggest that you ask your adviser to get a second opinion from someone else in the office. If you're still not satisfied, re-evaluate your relationship with the preparer.

[CaP'N GRuNGe]

OK, but not everyone has a mortgage and itemizes on their tax return.

Edited May 10, 2010 by CaP'N GRuNGe

[i_am_the_swammi]

OK, but not everyone has a mortgage and itemizes on their tax return.

 

1. You don't necessarily need to have a mortgage to itemize.

2. People will itemize if they have thousands of dollars in tax-deductible premiums to write-off.

[westvirginia]

Perhaps you should tell mt accountant and the IRS that. Seems they don't beleive so. Unless my my returns for the last 9 years of working independantly are not correct.

 

Oh wait...never mind....its you thats wrong again:

 

Look dude, to make up a business out of thin air so you can deduct insurance premiums in tax evasion.

 

Secondly, for a lotta folk, they won't meet that 7.5% floor. Bottom line, it's pretty much a standard deduction for business, and most individuals don't meet the criteria.

[driveby]

Obamacare Means Millions Could Lose Coverage [Grace-Marie Turner]

 

 

Major companies are beginning to recognize the extraordinary risk of continuing to provide health benefits for their workers under Obamacare.

 

"Many companies are examining a course that was heretofore unthinkable, dumping the health care coverage they provide to their workers in exchange for paying penalty fees to the government," according to Fortune magazine, which reviewed internal company documents.

 

These company reports are the canary in the coal mine warning politicians, businesses, and consumers of the huge upheaval that will be created by Obamacare. No one can afford this new law, especially taxpayers who will foot a much bigger bill for coverage if companies opt out.

 

The revelations came as a by-product of House Energy and Commerce chairman Henry Waxman's ill-fated demand that companies explain why they had embarrassed the administration by announcing big earnings reductions in response to the new law. Waxman was furious at publicly-traded companies for having the audacity to follow SEC rules and report the prospective earnings reductions that would result from losing part of a tax break for providing retiree health benefits.

 

He demanded documents from four major employers — AT&T, Verizon, Caterpillar and Deere — explaining what the bill would do to their health costs. He got 1,100 pages and quickly cancelled the hearing where the companies were slated to testify. Clearly Democrats did not want the full story to come out.

 

The new law will require every employer with more than 50 workers to either offer health insurance or pay an annual penalty of $2,000 per full-time worker — a fine that is much cheaper than the price of the ultra-expensive plans that will be required under the law. Even employers who offer health insurance are at risk of penalties if the premiums they charge exceed 9.5% of an employee’s household income (a figure that will be extraordinarily difficult for employers to ascertain).

 

"AT&T revealed that it spends $2.4 billion a year on coverage for its almost 300,000 active employees, a number that would fall to $600 million if AT&T stopped providing health care coverage and paid the penalty option instead," Fortune reported.

 

The potential costs to the companies of the fines, penalties, mandates, and exposure to risk under Obamacare are great, and many other employers will conclude it will be a lot cheaper to pay the fines than to continue to provide health insurance.

 

The findings send fear into the hearts of working Americans who have been promised over and over that if they like their current coverage, they can keep their insurance. But because neither the White House nor the leaders in Congress seem to understand the power of incentives, they have passed a law that gives companies every incentive to drop coverage.

 

If this happens, the costs of the health-overhaul law would skyrocket as tens of millions of Americans lose their job-based plans and instead get taxpayer-subsidized coverage in the publicly operated state exchanges or Medicaid. The Congressional Budget Office based its analysis on the assumption that the great majority of people with job-based coverage would keep it under the new law.

 

The statist solution would be to mandate that businesses provide health insurance for their workers or raise the penalty so it is at least as high as the cost of insurance. But if Republicans take control of one or both houses of Congress this November, that would not happen.

 

The only real solution will be to repeal Obamacare and take a step-by-step approach to sensible reform that does not radically disrupt the system.