(UPDATE: The giveaway is now closed. We have our winners! See the comments for more info.)
As a small business owner, my family pays for our own health insurance. It is, after housing, the single biggest check that we write each month (if you don't count consolidated student loans - more on that later this week). And we're not alone. More and more families are shouldering the cost of health care as fewer companies offer benefits and still others re-characterize employees as independent contractors in an effort to avoid laws which might require them to pay benefits.
Fortunately, the cost of health insurance is deductible if you itemize your deductions on federal form 1040. You report health insurance payments as part of your medical expenses claimed on a Schedule A. You can deduct expenses you pay for medical and dental care for yourself, your spouse, and your dependents.
Self-employed individuals may deduct amounts paid during the taxable year for insurance that constitutes medical care for the taxpayer, his or her spouse, and dependents under the age of 27. With respect to health care benefits, self-employed individuals generally include sole proprietors, partners in a partnership, members of an LLC treated as a partnership for tax purposes, and shareholders who hold at least 2% of the stock of an S corporation.
The amount that you can deduct are those medical expenses - including health care insurance premiums - which exceed 10% of your adjusted gross income (taxpayers age 65 and older may continue to use the older 7.5% threshold through December 31, 2016). By way of quick example, let's say that your AGI is $50,000, the cost of your annual premiums is $16,000 (average in the U.S.) and you have no other medical expenses. You can deduct $11,000 on your Schedule A, or $16,000 (the cost of the insurance) less $5,000 (10% of your AGI).
(Note that for some self-employed persons, the above-the-line deduction at line 29 may be better. Some restrictions apply: check with your tax professional for more information.)
What if you don't pay for your own health insurance benefits? Clearly you don't take the deduction. But you don't pay federal income tax on those benefits either: if you receive health care insurance as a perk of your employment, the value of those benefits is generally excluded from income. The costs of the premiums are federal income tax free to you even if they appear on your form W-2: reporting those benefits is just one of the changes that taxpayers are getting used to as part of the Affordable Care Act.
And that brings us to today's giveaway! VSP Vision Care is offering each of three readers a free individual vision insurance plan for a year of coverage from VSP Direct®. VSP Direct is VSP Vision Care’s individual insurance product, offering high-quality vision benefits directly to consumers. VSP® Vision Care is the nation’s only not-for-profit vision care company. Individual vision insurance from VSP Direct includes coverage for an eye exam with a low co-payment, allowance for designer frames or contacts, fully covered lens options with 20-25 percent off any non-covered options, and access to the largest doctor network in the industry – all backed by a 100 percent satisfaction guarantee. VSP Direct offers the lowest out-of-pocket costs in the industry and a typical annual savings of $227 a year.
To enter to win, just post a comment below telling me the age you started wearing glasses or contacts. If you don't wear either, just say that! I'll go first to get you started: I got glasses in the 4th grade.
Entries must be posted in the comments section for this blog post in the space below by 10:00 p.m. EST on September 18, 2014. It's just that easy. I’ll choose three winners randomly (using a number generator) out of all of the qualifying entries.
Be sure and read the fine print for more rules because, as you know, I’m a lawyer and I like rules:
Don’t panic if your comment doesn’t show immediately. If it goes to moderation because, for example, you’re new here, the time stamp on your comment is what counts. If you have difficulty registering, please send an email to blogadmin@forbes.com and copy me (tech@taxgirl.com) so that I can help if I need to/can.
I love my
Twitter followers and my Facebook fans but for this particular giveaway, tweets and Facebook comments will not be counted. Ditto for emails. You must leave your comment on the blog at this post.You can enter as many times as you like but you must leave a different answer each time you comment.
Offensive comments or comments that otherwise violate the comment policy will be deleted and will not be considered valid for purposes of the contest. Similarly, pingbacks and other links will be disregarded for purposes of the contest.
I will need your full name and your email address: be sure to use your real information when you register to leave a comment.
I won’t publish your email address but I do need contact information for the winning entry. If you win and I can't reach you, it's a forfeit.
Due to shipping considerations, you must have a valid United States address. Sorry, Canada, eh?
I respect your privacy and I will not send you anything unrelated to your entry in this contest. By entering the contest, you agree that I may post any part or all of your submission including your name as a part of the contest announcements or promotions, with the exception of your email address.
Like Judge Judy, my determination is final.
Prizes are provided directly by our sponsors and are not exchangeable or redeemable for other prizes. Sponsors do not pay for placement and do not receive any compensation for contributions – neither do I! I have no affiliation, paid or otherwise, with any of our sponsors.
If you aren't allowed to participate in giveaways because of the laws in your state or your age or an agreement you've made with your mother, consider this giveaway not applicable to you. In other words: void where prohibited or restricted.
Finally, the giveaway is about me, me, me. It’s not affiliated with or endorsed by Forbes. So leave them out of it, okay?
Comment away! And thanks for participating in Back To School 2014!
