News for Small Businesses

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News for Small Businesses

This notice came out from the IRS today and would likely prove useful to your self employed customers. Jeff

Important Tax Law Changes for 2010

IRS Tax Tip 2011-31

Taxpayers should make sure they are aware of many important changes to the tax law before they complete their 2010 federal income tax return.

Here are several important changes that the IRS wants you to keep in mind when you file your 2010 federal income tax return in 2011.

Health Insurance Deduction Reduces Self Employment Tax In 2010, eligible self-employed individuals can use the self-employed health insurance deduction to reduce their social security self-employment tax liability in addition to their income tax liability. As in the past, eligible taxpayers claim this deduction on Form 1040 Line 29. But in 2010, eligible taxpayers can also enter this amount on Schedule SE Line 3, thus reducing net earnings from self-employment subject to the 15.3 percent social security self-employment tax.

Premiums paid for health insurance covering the taxpayer, spouse and dependents generally qualify for this deduction. Premiums paid for coverage of an adult child under age 27 at the end of the year, for the time period beginning on or after March 30, 2010, also qualify for this deduction, even if the child is not the taxpayer’s dependent.

As before, the insurance plan must be set up under the taxpayer’s business, and the taxpayer cannot be eligible to participate in an employer-sponsored health plan. Details, including a worksheet, are in the instructions to Form 1040.

From: e-News for Small Business [mailto:irs@service.govdelivery.com]
Sent: Wednesday, February 16, 2011 3:55 PM
To: Jeffrey Hogan
Subject: IRS e-News for Small Businesses

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e-News for Small Businesses

February 16, 2011

Tax Resources for Small Businesses

http://www.irs.gov/businesses/small/index.html“>Small Business and Self-Employed One-Stop Resource

http://www.irs.gov/businesses/small/article/0,,id=99200,00.html“>Small Business Forms & Pubs

http://www.irs.gov/businesses/small/article/0,,id=99202,00.html“>Small Business Events

http://www.irs.gov/efile/article/0,,id=118520,00.html“>e-File for Businesses and Self-Employed

http://www.irs.gov/businesses/small/article/0,,id=98862,00.html“>Businesses with Employees

http://www.irs.gov/businesses/small/article/0,,id=101169,00.html“>Small Business Products

http://www.irs.gov/businesses/small/article/0,,id=115045,00.html“>Self-Employed Individuals

http://www.irs.gov/businesses/small/article/0,,id=98263,00.html“>S Corporations

Other Resources

http://www.irs.gov/businesses/small/article/0,,id=154770,00.html“>Find it Fast!

http://www.irs.gov/formspubs/index.html?portlet=3;“>All Forms and Pubs

http://www.irs.gov/efile/article/0,,id=151880,00.html“>Electronic IRS

http://www.irs.gov/newsroom/article/0,,id=158619,00.html“>Federal Tax Gap

http://www.irs.gov/retirement/index.html“>Retirement Plans

http://www.irs.gov/charities/index.html“>Tax Information for Charities
and Other Non-Profits

http://www.irs.gov/businesses/small/article/0,,id=99021,00.html“>State Links

http://www.irs.gov/businesses/small/content/0,,id=98864,00.html“>Other Agencies

http://www.irs.gov/businesses/small/article/0,,id=109886,00.html“>SSA/IRS Reporter

Issue Number: 2011-4

Inside This Issue

Health insurance deduction reduces self-employment tax
Do you barter?
Lactation expenses as medical expenses
Recent IRS announcements

1. Health insurance deduction reduces self-employment tax

Eligible self-employed individuals can use the self-employed health insurance deduction to reduce their Social Security tax in addition to their income tax liability for the 2010 tax year.