Self-Employed Insurance Enticements

Sole proprietors, partnerships, and members of a limited liability or LLC are considered to be self-employed individuals in the eyes of the government. These constitute the majority of the small businesses that covet the country. Health insurance has always been an issue because of the high expense comparable to other surrounding larger businesses.

The larger corporations may have a higher price tag attached to the low cost health insurance they are able and willing to afford their employees, but as with all their other financial issues this also constitutes a large write off annually. The small business operators have a more difficult time with the Internal Revenue Service when it comes time to list their company deductions.

When small business, partnerships, and members of a limited liability or LLC file their Form 1040 by the required March 15 deadline, they must be able to file an itemized listing for the year before they are permitted to deduct any of their annual health insurance costs. First, each must meet the required 7.5% of their adjusted annual gross income.

Once the small business and others reach the required 7.5% of their adjusted annual gross income, they are permitted the value amount of health insurance that exceeds that portion. It is more like a guessing game or a roll of the dice and this is what makes it so difficult for small business to absorb the total cost of health insurance coverage for their employees.

Sometimes it becomes very difficult to keep abreast of the changing eligibility rules, laws, and regulations as they can change from year to year. Eligibility for health insurance deductibility, according to the Internal Revenue Service, is determined month to month because of the many variables that each small business is confronted.

New employees are hired throughout the year as other employees leave for better opportunities. This is just the nature of the beast. The small business owner must then accurately go through his or her journals to decipher whose health insurance premiums are deductible and whose health insurance premiums are not deductible.

Another factor for all small business, sole proprietors, partnerships and the like must pay attention to is the earned income limitation rules. The deduction percentage for supplying affordable health insurance to the employees may not exceed the annual gross income of the business. Keeping accurate journals will help to keep your health insurance finances and all your finances in order and ready to present to the Internal Revenue Service when the fiscal year comes to an end.