How to file return; Health Insurance Deduction if You Are Self-Employed

Below are rules and tips on Health Insurance deductions IF, you are self-employed.  You will notice right off that you have to have a "net profit from self-employment"  Check out the rules and see if you can qualify to take the health insurance deduction.

Health Insurance Deduction if You’re Self-Employed

If you are self-employed, the IRS wants you to know about a tax deduction generally available to people who are self-employed.

The deduction is for medical, dental or long-term care insurance premiums that self-employed people often pay for themselves, their spouse and their dependents. The insurance can also cover your child who was under age 27 at the end of 2012, even if the child was not your dependent.

You may be able to take this deduction if one of the following applies to you:

• You had a net profit from self-employment. You would report this on a Schedule C, Profit or Loss From Business, Schedule C-EZ, Net Profit From Business, or Schedule F, Profit or Loss From Farming.

• You had self-employment earnings as a partner reported to you on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc.

• You used an optional method to figure your net earnings from self-employment on Schedule SE, Self-Employment Tax.

• You were paid wages reported on  Form W-2, Wage and Tax Statement, as a shareholder who owns more than two percent of the outstanding stock of an S corporation.

• There are also some rules that apply to howthe insurance plan is established. Follow these guidelines to make sure the plan qualifies:

• If you’re self-employed and file Schedule C, C-EZ, or F, the policy can be in your name or in your business’ name.

• If you’re a partner, the policy can be in your name or the partnership’s name and either of you can pay the premiums. If the policy is in your name and you pay the premiums, the partnership must reimburse you and include the premiums as income on your Schedule K-1.

• If you’re an S corporation shareholder, the policy can be in your name or the S corporation’s name and either of you can pay the premiums. If the policy is in your name and you pay the premiums, the S corporation must reimburse you and include the premiums as wage income on your Form W-2.

How to file taxes, Home Office Tax Break

Because Home Office deductions can be used to lower your tax liability, considerably, the IRS often times reviews these types of returns for audits.  The best way to ensure that you will be OK, if the IRS decides to ask questions, is to keep accurate and GOOD records.  If you do this one task, you can help protect yourself, not from an audit, but from the IRS being right in an audit.

 

Read what the IRS has said and know that you CAN deduct a Home Office, even if you have an Employer. 

 

Our advise is that you employ a tax professional who has experience in Schedule C tax returns.  Its not enough for a Tax Preparer, CPA, Enrolled Agent or Tax Attorney to have experience in Corporate or Individual tax returns, they need extensive experience in Schedule C tax returns.

 

 

Home Office Deduction: a Tax Break for Those Who Work from Home

 

If you use part of your home for your business, you may qualify to deduct expenses for the business use of your home. Here are six facts from the IRS to help you determine if you qualify for the home office deduction.

1. Generally, in order to claim a deduction for a home office, you must use a part of your home exclusively and regularly for business purposes. In addition, the part of your home that you use for business purposes must also be:

 

• your principal place of business, or

• a place where you meet with patients, clients or customers in the normal course of your business, or

• a separate structure not attached to your home. Examples might include a studio, workshop, garage or barn. In this case, the structure does not have to be your principal place of business or a place where you meet patients, clients or customers.

 

2. You do not have to meet the exclusive use test if you use part of your home to store inventory or product samples. The exclusive use test also does not apply if you use part of your home as a daycare facility.

 

3. The home office deduction may include part of certain costs that you paid for having a home. For example, a part of the rent or allowable mortgage interest, real estate taxes and utilities could qualify. The amount you can deduct usually depends on the percentage of the home used for business.

 

4. The deduction for some expenses is limited if your gross income from the business use of your home is less than your total business expenses.

 

5. If you are self-employed, use Form 8829, Expenses for Business Use of Your Home, to figure the amount you can deduct. Report your deduction on Schedule C, Profit or Loss From Business.

 

6. If you are an employee, you must meet additional rules to claim the deduction. For example, in addition to the above tests, your business use must also be for your employer’s convenience.

Tax Lopphole #21

Tax Loophole #21

A loss from one business will reduce your profit from another business!  Form 1040 Schedule C

Comming Soon, before November 1, 2012 $1.99 for Twenty One Major Tax Loopholes, on your nearest Amazon dot com store. 

Thirty one Tax Credits for Business Owners, Lower Taxes By Using These Tax Loopholes

Below are all the Business Tax Credits for 2011 - There may be some changes for 2012, however this list of credits will enable small business owners with the ability to use the credits to their tax advantage: (These tax credits related directly to Form 1040 - Schedule C)

1. Agricultural chemicals security credit (Form 8931). This credit applies to qualified agricultural chemical security expenses paid or incurred by eligible agricultural businesses. For more information, see Form 8931.

2.  Alcohol and cellulosic biofuel fuels credit (Form 6478). This credit consists of the alcohol mixture credit, alcohol credit, small ethanol producer credit, and cellulosic biofuel producer credit. For more information, see Form 6478.

3.  Alternative fuel vehicle refueling property credit (Form 8911). This credit applies to the cost of any qualified fuel vehicle refueling property you placed in service. For more information, see Form 8911.

4.  Alternative motor vehicle credit (Form 8910). This credit consists of the following credits for certain vehicles you placed in service. For more information, see Form 8910.

• Qualified fuel cell motor vehicle credit.
  
• Advanced lean burn technology motor vehicle credit.
  
• Qualified hybrid motor vehicle credit.
  
• Qualified alternative fuel motor vehicle credit.
  
• Qualified plug-in electric drive motor vehicle conversion credit.
  

5.  Bio diesel and renewable diesel fuels credit (Form 8864). This credit applies to certain fuel sold or used in your business. For more information, see Form 8864.

6.  Carbon dioxide sequestration credit (Form 8933). This credit is for carbon dioxide which is captured at a qualified facility and disposed of in a secure geological storage or used in a qualified enhanced oil or natural gas recovery project. For more information, see Form 8933.

7.  Credit for employer social security and Medicare taxes paid on certain employee tips (Form 8846). This credit is generally equal to your (employer's) portion of social security and Medicare taxes paid on tips received by employees of your food and beverage establishment where tipping is customary. The credit applies regardless of whether the food is consumed on or off your business premises. For more information, see Form 8846.

8.  Credit for employer differential wage payments (Form 8932). This credit provides certain small businesses with an incentive to continue to pay wages to an employee performing services on active duty in the uniformed services of the United States for a period of more than 30 days. For more information, see Form 8932.

9.  Credit for employer-provided childcare facilities and services (Form 8882). This credit applies to the qualified expenses you paid for employee childcare and qualified expenses you paid for childcare resource and referral services. For more information, see Form 8882.

10.  Credit for increasing research activities (Form 6765). This credit is designed to encourage businesses to increase the amounts they spend on research and experimental activities, including energy research. For more information, see Form 6765.

11.  Credit for small employer health insurance premiums (Form 8941). This credit applies to the cost of certain health insurance coverage you provide to certain employees. For more information, see Form 8941.

12.  Credit for small employer pension plan startup costs (Form 8881). This credit applies to pension plan startup costs of a new qualified defined benefit or defined contribution plan (including a 401(k) plan), SIMPLE plan, or simplified employee pension. For more information, see Publication 560, Retirement Plans for Small Business (SEP, Simple, and Qualified Plans).

13.  Disabled access credit (Form 8826). This credit is a nonrefundable tax credit for an eligible small business that pays or incurs expenses to provide access to persons who have disabilities. You must pay or incur the expenses to enable your business to comply with the Americans with Disabilities Act of 1990. For more information, see Form 8826.

14.  Distilled spirits credit (Form 8906). This credit is available to distillers and importers of distilled spirits and eligible wholesalers of distilled spirits. For more information, see Form 8906.

15.  Empowerment zone and renewal community employment credit (Form 8844). You may qualify for this credit if you have employees and are engaged in a business in an empowerment zone for which the credit is available. For more information, see Form 8844.

16.  Energy efficient appliance credit (Form 8909). This credit is available for manufacturers of eligible appliances. For more information, see Form 8909.

17.  Energy efficient home credit (Form 8908). This credit is available for eligible contractors of certain homes sold for use as a residence. For more information, see Form 8908.

18.  Indian employment credit (Form 8845). This credit applies to qualified wages and health insurance costs you paid or incurred for qualified employees. For more information, see Form 8845.

19.  Investment credit (Form 3468). The investment credit is the total of the following credits. For more information, see Form 3468.

• Rehabilitation credit.
• Energy credit.
• Qualifying advanced coal project credit.
• Qualifying gasification project credit.
• Qualifying advanced energy project credit.
• Qualifying therapeutic discovery project credit.

20.  Low sulfur diesel fuel production credit (Form 8896). This credit is for the production of low sulfur diesel fuel by a qualified small business. For more information, see Form 8896.

21.  Low-income housing credit (Form 8586). This credit generally applies to each new qualified low-income building placed in service after 1986. For more information, see Form 8586.

22.  Mine rescue team training credit (Form 8923). This credit applies to training program costs you pay or incur for certain mine rescue team employees. For more information, see Form 8923.

23.  New hire retention credit (Form 5884-B). This credit may apply if you hired an employee after February 3, 2010, and before January 1, 2011, and the employee works for you for at least 52 consecutive weeks. For more information, see Form 5884-B.

24.  New markets credit (Form 8874). This credit is for qualified equity investments made in qualified community development entities. For more information, see Form 8874.

25.  Nonconventional source fuel credit (Form 8907). This credit is for qualified coke and coke gas you produced and sold to an unrelated person during the tax year. For more information, see Form 8907.

26.  Orphan drug credit (Form 8820). This credit applies to qualified expenses incurred in testing certain drugs for rare diseases and conditions. For more information, see Form 8820.

27.   Qualified plug-in electric drive motor vehicle credit (Form 8936). This credit is for new qualified plug-in electric drive motor vehicles placed in service during the tax year. For more information, including information on what is considered as a qualified plug-in electric drive motor vehicle, see Form 8936.

28.  Qualified plug-in electric vehicle credit (Form 8834, Part I only). This portion of the credit is for certain qualified plug-in electric vehicles. See Form 8834 for more information, including information on what is considered as a qualified plug-in electric vehicle.

29.  Qualified railroad track maintenance credit (Form 8900). This credit applies with respect to qualified railroad track maintenance expenditures paid or incurred during the tax year. For more information, see Form 8900.

30.  Renewable electricity, refined coal, and Indian coal production credit (Form 8835). This credit is for the sale of electricity, refined coal, or Indian coal produced in the United States or U.S. possessions from qualified energy resources at a qualified facility. For more information, see Form 8835.

31.  Work opportunity credit (Form 5884). This credit provides businesses with an incentive to hire individuals from targeted groups that have a particularly high unemployment rate or other special employment needs. For more information, see Form 5884.

The above list is 31 ways to legally pad your small business tax return.  The U.S. Gov has explained in black and white what is important to them.  When you align a certain number of your goals with their goals, they will reward you handsomely, by providing you with the opportunity (in most cases) to subtract the credits directly from your tax.