Tax season is heavy upon us here in the USA, and if you’re self-employed and file a Schedule C for your business, you might wonder where are your profits are going. A huge chunk of your cash will go to federal and state taxes.
I’ve got nothing against paying taxes. I like to think of it this way: the taxes I’m paying today, go to my parent’s monthly social security payment and their medicare. It’s a fair trade in my book.
However, the federal goverment doesn’t treat all self-employed people equally. For instance, did you know that you can deduct your health insurance premiums if you bought the policy through your business, but you can not deduct your health insurance premiums if you pay for them through a spouse’s health insurance policy at their job?
And did you know that you pay self-employment tax ON your health insurance premiums? Health insurance premiums are deducted on your 1040, not your schedule C, so are not included in your business expenses when calculating your profit (and therefore your self-employement tax).
It doesn’t seem fair to me.
The National Association of Self Employed (NASE) tries to do advocacy work on behalf of the self-employed in the USA. Check out their website to see which issues they’re working on these days, and to recommend new issues to them.
House Small Business Committee Chairman Donald Manzullo (R-IL) and Ranking Member Nydia Velazquez (D-NY) have introduced the Self-Employed Health Care Affordability Act of 2003 (H.R. 1873). The Senate companion bill, S. 2433, the Equity for Our Nation’s Self-Employed Act of 2004, was introduced by Senator Jeff Bingaman (D-NM) and Senator Craig Thomas (R-WY).
Retirement Plans for Small Businesses