Expenses and Deductions on Schedule C:
As a business owner who is also an employer, you are entitled to take IRS tax deductions for the expenses you incur for employee benefit programs that are separate and apart from pension or profit sharing plans. If you file a Schedule C, these deductions are taken on Line 19 of Schedule C.
The deductions are available for your expenses for all employees of your company. However, as a self-employed individual, generally, you are not be able to include the expenses you incur for your own participation in group life insurance, your health insurance premium, or dependent care costs.
These expenses are generally still deductible for self-employed individuals, but they must be accounted and taken on different forms. For example, the contributions you make for your own accident and health insurance on behalf of yourself, your spouse, your dependents as a self-employed person can be deducted on Form 1040, line 29, even if you do not itemize deductions. Furthermore, the employer paid portion of accident and health contributions is deductible on Schedule C.
With respect to a dependent care assistance program, when you make contributions on your own behalf, you must file Form 2441 to calculate your deductible contribution to the plan.
As to group life insurance, the employer portion is again deductible, but you are not allowed to deduct your own contribution for the owner-employee’s share of the costs in acquiring group life coverage.
The complexity of these deductions causes many taxpayers to miss out on significant deductions they are entitled to take. Don’t miss out on yours!
You'll find everything you need at Turbo Tax Online to help you maximize your business tax deductions and credits. Learn more about deducting employee expenses for life and health insurance.