2011 Tax Planning – Health Insurance Credits

Health insurance benefits are on the minds of all Americans, business owners and employees.  Changes in the tax law make it easier then ever for business owners to take advantage of tax benefits as they offer insurance to their employees, and try to get coverage for themselves.

Self-employed health insurance deduction. Effective March 30, 2010, a self-employed person who paid for health insurance may be able to include in his self-employed health insurance deduction any premiums he paid to cover his child who was under age 27 at the end of 2010, even if the child was not his dependent. Also, health insurance costs for a taxpayer and his family are deductible in computing 2010 self-employment tax.

Small business health insurance credit. There’s a new tax credit for an eligible small employer who makes qualifying contributions to buy health insurance for his employees. This credit is very complex but it can yield substantial tax savings. In general, the credit is 35% of premiums paid and can be taken against regular and alternative minimum tax.

If you are confused about how to take advantage of this important tax credit, please give us a call.

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