Starting Your Business/Keeping Tax Records

What are Business Expenses

Health Insurance Deduction for the Self-Employed

You can deduct 60% of the amount paid during 2000 for medical insurance and qualified long-term care insurance for yourself and your family if you are one of the following.

• A self-employed individual.
• A general partner (or a limited partner receiving guaranteed payments) in a partnership.
• A shareholder owning more than 2% of the outstanding stock of an S corporation.

You are 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 this deduction on line 28 of Form 1040.

Percentage increases after 2001.

For tax years beginning after 2001, the deductible percentage of your health insurance premiums gradually increases. The increases are shown in the following table.

For Tax Years Beginning in:	Deductible Percentage
1999 through 2001 2002 After 2002	60% 70% 100%

Long-term Care Insurance

 

Important References

Publication 535              Business Expenses