2010 Form 1040 Tax Breaks: Health Ins. Credits

The 2010 Form 1040 reflects a number of new tax breaks we want you to be aware of so you can take full advantage of them.  Today’s post addresses changes to the tax laws regarding health insurance for small and self-employers.

There’s a new tax credit for an eligible small employer who makes qualifying contributions to buy health insurance for his/her employees. This credit is very complex but it can yield substantial tax savings. In general, the credit is 35% of premiums paid and can be taken against regular and alternative minimum tax.

There is also a self-employed health insurance deduction for 2010. Effective March 30, 2010, a self-employed person who paid for health insurance may be able to include in his/her self-employed health insurance deduction any premiums s/he paid to cover his/her child who was under age 27 at the end of 2010, even if the child was not his/her dependent. Also, health insurance costs for a taxpayer and his/her family are deductible in computing 2010 self-employment tax.

If you have any questions regarding these tax changes, or tax planning in general, please contact our office.

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