Tax Breaks for the Self-Employed and Small Business Owners

The following is a compilation of a number of tax breaks available to self-employed individuals and/or small business owners. Some can be implemented before years end, providing benefits for your 2011 return, while others will provide planning opportunities for 2012.

• Deduct Health Insurance - A self-employed individual may deduct the amount paid during the tax year for medical insurance for himself, his spouse, his dependents, and even his children who are under age of 27 even if they are not dependents. There is no limit on the amount that may be deducted, except that the deduction cannot exceed net self-employment income. For this deduction, health insurance includes medical, dental, vision, and long-term care premiums. The medical care insurance isnt limited by the normal 7.5%-of-AGI floor on itemized medical expenses, and it isnt a business schedule deduction. Instead, its an above-the-line deduction on page 1 of Form 1040.
• Deduct a Home Office – If you work from an office in your home, perform management or administrative tasks from a home office, or store product samples or inventory at home, you may be entitled to deduct an allocable portion of certain costs of maintaining your home. This would include allocated maintenance, utilities, etc. …Continue Reading