Question: I am self-employed and accept a accumulation medical allowance plan for my advisers and my family. Can I abstract the medical allowance premiums from my business income?
Answer: The medical allowance premiums you pay on account of your advisers can be deducted as an accustomed and all-important business amount on your Form 1040, Schedule C, thereby, abbreviation your taxable business income.
However, the premiums paid for yourself and your ancestors are not deductible from your business assets as appear on your Schedule C. Instead, the medical allowance premiums accept a appropriate tax treatment. Premiums paid are deducted adjoin your gross assets in accession at your adapted gross income.
To abstract your premiums on your Form 1040, you charge accommodated the afterward requirements:
This appropriate analysis is abnormally important for you if you do not catalog your deductions (take the accepted deduction), or your absolute medical costs (including medical allowance premiums) do not beat the 7.5 percent adapted gross assets limitation for deductibility of medical expenses. By actuality self-employed, this appropriate analysis will acquiesce you to abstract the premiums paid.
Question: Are the rules the aforementioned if my wife works for addition abroad and receives a Form W-2?
Answer: If you are self-employed, and either you or your apron has allowance through an employer’s program, the appropriate tax analysis for self-employed individuals declared aloft does not administer to you. The bloom allowance premiums you pay for yourself and your ancestors are advised as admitting you are not self-employed. Therefore, if you catalog your deductions, you may still be able to abstract the allowance premiums paid as a medical expense.
Please agenda that ally of partnerships, associates of bound accountability companies, and greater than 2 percent shareholders of S corporations about abatement beneath the aforementioned rules for deducting bloom allowance as sole proprietors.
Barry Dolowich is a certified accessible accountant in Monterey. He can be accomplished at 831-372-7200, P.O. Box 710, Monterey 93942-0710 or [email protected]
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