People who are self-employed and provide their own health insurance will be able to deduct the insurance premiums from business income, thus reducing their self-employment taxes. Normally, the self-employed can only deduct health insurance premiums when calculating income tax, but not for calculating the self-employment tax.
The same rules and restrictions that normally apply to self-employed people who deduct insurance premiums will still apply (e.g. must not be eligible for coverage under a spouse’s insurance plan).
This change is effective for 2010 only and was part of the “Small Business Jobs Act” that was signed into law in September.
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