Industry News

Tax Deduction for Self-Employed going up to 100%

For you consultants, free-lance writers and other self-employed workers of the world you will be allowed to deduct 100% of your health-insurance premiums in 2003. That will be up from 70% for this year and only 60% for 2001.

The IRS rules for Self-Employed Health Insurance Deduction

You may be able to deduct 70% of the amount paid in 2002 for medical insurance and qualified long-term care insurance for you, your spouse, and your dependents if you are one of the following.

* A self-employed individual with a net profit reported on Schedule C, C-EZ, or F.

* A partner with net earnings from self-employment reported on line 15a of Schedule K-1 (Form 1065).

* A shareholder owning more than 2% of the outstanding stock of an S corporation with wages from the corporation reported on Form W-2.

The insurance plan must be established under your business. You may be allowed this deduction whether you paid the premiums yourself or your partnership or S corporation paid them and you included the premium amounts in your gross income. Take the deduction on line 28 of Form 1040.

For Tax Years Beginning In: Deductible Percentage

Years after 2002 100%

Luxury Tax is eliminated

A luxury tax on cars, enacted in 1990, finally will disappear come Jan. 1. This year, the tax is 3% of the purchase price above $40,000 on new passenger cars and certain other vehicles. For example, the luxury tax on a $90,000 new car would be $1,500 this year and zero next month.