Tag: Tax deductions list

Tag: Tax deductions list

When Can You Claim a Health Insurance Deduction?

When Can You Claim a Health Insurance Deduction?

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Not too many people enjoy paying for health insurance, but it’s nice to have it when you need it most. The problem is health insurance is very expensive today and can be a great financial burden for individuals and families. When you look at the tax deductions list, there are some qualifications you may meet to receive a health insurance deduction. These deductions can help increase your tax refund or potentially reduce your tax liability significantly. We’ve explained how you can qualify and help you to understand when health insurance may not be deductible depending on your situation.

Health Insurance And Self-Employment

Paying for health insurance while self-employed can be a major financial burden. The good news is if you are not eligible for a health plan through your spouse’s employer, then you can deduct some of the premiums paid on your tax return. The amount you deduct just can’t exceed the amount of income earned in any given year. Most of the time, people who are self-employed have to pay health insurance premiums with after-tax dollars. In those cases, the premiums paid are tax-deductible since you’ve already paid taxes on the income earned.

Know What Health Insurance Is Not Tax-Deductible

Even though health insurance premiums are tax-deductible, you can’t deduct the costs if your employer pays all of it. However, if the employer only pays a portion of the premiums for you, then you can deduct the premiums you paid directly. The catch is you likely pay your insurance premiums with pre-tax dollars if it gets taken directly out of your paycheck. In those instances, the premiums are not tax-deductible since they were paid with dollars free of income tax. Your tax professional can help you sort out these complications and help you maximize the amount you can deduct on your taxes.

Understanding Limitations And Qualifications

With the cost of health insurance being so high, it’s understandable people want to explore every possible option to get some tax relief. To deduct health insurance from your taxes, you have to itemize your deductions and the health-related expenses have to be more than 7.5% of the adjusted gross income you earned. However, if you’re self-employed, then you don’t have to meet the 7.5% requirement since the premiums are considered to be a self-employment income adjustment rather than an actual tax deduction.

Americans have enough responsibilities without needing to know specific tax laws. You deserve to get the most tax relief possible and Rocket Tax Relief is here to help. Health insurance is always a hot, and sometimes controversial, topic and we keep up with all of the latest laws and qualifications for tax purposes. The global pandemic has also impacted health insurance deductions, so you may qualify for even more tax relief if you have been directly impacted financially. Let us do a lot of the work for you when it comes to tax preparation and contact us today to see how we can help.

Common Tax Deductions Available for Self-Employed Individuals

Common Tax Deductions Available for Self-Employed Individuals

Tax deductions list

Self-employed individuals have a lot of flexibility in their day-to-day lives, but that flexibility also brings some different rules regarding taxes. Earnings on self-employment income are not taxed upfront like they are for people who receive a W-2 for their income. This requires individuals to plan their income accordingly since they typically have to pay more taxes either quarterly or annually. Self-employed people can experience some tax relief by looking at the tax deductions list and reducing their liability by deducting certain expenses. These are the common tax deductions self-employed individuals should not overlook.

Phones

Your cell phone or home phone can be deducted as part of your business. However, you need to be able to prove that the usage is for business purposes. Mixing business with your personal life can be problematic and too many deductions could raise red flags for a potential tax audit. If you use your phones for both business and personal use, keep records of how often you use them for each and you can deduct just the portion used for business from your taxes.

Vehicle Or Travel Expenses

Any travel expenses incurred directly for your business can be deducted. And 50% of expenses from meals and entertainment can be deducted as well. If you drive your vehicle for business, the gas, repairs, maintenance, toll bills and other expenses can be considered tax deductions. But like with the phones, it’s important to distinguish and keep accurate records of how often the vehicle is used for business purposes versus personal purposes.

Home Office Space And Office Supplies

When you have a home office space dedicated to your business, you can deduct some of your household expenses needed to run your business. This can include the internet, electricity and even the exact square footage of the room. Office supplies are also on the tax deductions list, including computers, printers, software, pens, paper and more. And if you have to pay any monthly or annual fees for subscriptions or memberships related to your business, don’t forget to deduct them also.

Health Insurance

A big tax deduction self-employed individuals can take advantage of is health insurance premiums. As long as you aren’t eligible for a health plan through your spouse’s employer, you should qualify to be able to write-off any health insurance premiums you pay. With the high cost of health insurance today, it’s worth looking into whether you can deduct the premiums paid.

Rocket Tax Relief can help you identify every possible tax deduction you qualify for. Being self-employed is a great accomplishment, but it also means you may not have the time to do things like search through the tax deductions list to see what qualifies as a deduction. When you contact us, we will work with you to fully understand your story and your business and take the appropriate measures to ensure you get as much tax relief as possible through deductions.