How can you best obtain affordable health care coverage in 2013 if you’re self-employed? Depending on your situation, you might be able to go through the “back door.”
Strategy: Hire your spouse to work for your business. Then cover your spouse under your health insurance plan as an employee. As a result, you’re allowed to provide insurance to dependents of your spouse—including yourself!
For years, deductions claimed by self-employeds for health insurance expenses were limited, but now you’re entitled to deduct 100% of the cost. So you can deduct the health insurance costs you provide for yourself. However, the deduction for a self-employed individual is claimed on your personal tax return, rather than as a business expense.
This is generally less advantageous for self-employeds. Reason: Your net income is higher for self-employment tax purposes. For 2013, you’re required to pay 15.3% on the first $113,700 of self-employment income and 2.9% on amounts above that. And you can’t deduct the health insurance premiums from your self-employment income.
Thus, even with the 100% deduction, the back-door method is still preferable. This reduces your business income on all levels.
Tip: Significant health care law changes take effect soon. We’ll have more in future articles.
Like what you've read? ...Republish it and share great business tips!
Attention: Readers, Publishers, Editors, Bloggers, Media, Webmasters and more...
We believe great content should be read and passed around. After all, knowledge IS power. And good business can become great with the right information at their fingertips. If you'd like to share any of the insightful articles on BusinessManagementDaily.com, you may republish or syndicate it without charge.
The only thing we ask is that you keep the article exactly as it was written and formatted. You also need to include an attribution statement and link to the article.
" This information is proudly provided by Business Management Daily.com: http://www.businessmanagementdaily.com/35899/squeeze-through-health-insurance-loophole "