For tax years beginning after December 31, 2009, self-employed individuals may now use the deduction for the cost of health insurance in calculating net earnings from self-employment for purposes of determining self-employment taxes. In prior years self-employed individuals were able to take a deduction for health insurance costs paid for the individual and his/her immediate family, for income tax purposes. However, in determining the self-employed income subject to self-employment taxes, the self-employed individuals were not allowed to deduct any health insurance costs.

The Small Business Jobs Act of 2010 signed into law on September 27, 2010 contains the provision that enables self-employed individuals to now have similar tax savings benefits for health insurance premium costs as allowed to employees. Please contact our office if you have any questions.