Health care costs are skyrocketing for business owners and self-employed entrepreneurs . Fight back with these tax saving strategies ! - by Ross Brunson , President of BookEase , Inc .
Health insurance has become a very large topic of conversation in the past few years . With the massive increases in health care costs and with government ’ s desire to make health care affordable , we have witnessed the unpopular government takeover of what many feel is the greatest health care system in the world .
Whether the new health care law will continue in effect or whether it will be repealed still remains to be seen . But one thing is for sure and that is that health care expenses will remain an important topic well into the foreseeable future .
Health care insurance premiums , policy deductibles , co-insurance payments , prescription costs and doctor ’ s co-pay requirements have a tendency to eat up the income of many families . The issue we want to explore today is if Uncle Sam ( our Government ) will allow us to use these health care expenses to reduce our taxes .
The Individual Tax Payer
The first hope the average working person has to use health care and medical expenses to reduce their annual taxes is found on the personal tax return . For those individuals desiring to itemize their deductions , the
IRS will allow for the deduction of various expenditures from their income prior to being assessed their taxes .
These itemized deductions include things like mortgage interest , real estate taxes and charitable contributions paid out during the tax year . To be able to deduct these itemized expenditures they first must be listed on a Schedule A and attached to a personal tax return . On this Schedule A , there is also a place to list the amount of health care and medical expenses incurred throughout the year .
At first glimpse one might think , wow this is fantastic ; we can use all of our medical expenses to reduce our taxes . Isn ’ t the IRS wonderful ?! Let ’ s not get carried away with joy just yet .
There are two major problems with writing off medical expenses on the Schedule A . The first problem is that not everyone has enough eligible expenditures to justify itemizing their deductions using a Schedule A . As a result , they lose the ability to write off their medical and health care costs .
The second problem is that the IRS requires anyone using a Schedule A to itemize their deductions to first deduct 7.5 % of their adjusted gross income from the amount of their medical expenses . This will usually
14 | September 2011 www . DotComSecrets . com