With Obamacare, the topic of medical deductions and credits has gotten even more convoluted. But of course, it is important to understand the rules. In fact, you may get some juicy tax benefits.
So to understand things, I’ve put together a guide.
The first thing to realize is that you do not have to be a business owner to get a deduction for your medical expenses.
However, this approach is fairly limited. A better option is to take a business deduction.
OK, then what about Obamacare? There are two main parts for business owners to think about:
Personal Coverage: Most people will need to get a policy, unless you already have a plan (such as through your business or spouse’s employer). This is whether the person is employed or not – or self-employed. The coverage is fairly wide. You also need to provide coverage for your spouse and dependents (for children up to 18 years old).
If not, you will be subject to a penalty, which comes off your tax return. It is $95 per adult and $47.50 per child. In all, the maximum is $285 or 1% of the overall income (for 2014), whichever is greater. The penalty amount also increases over the next few years.
But depending on your income, you may get a tax credit that will reduce your premiums.
Business: If you have under 25 employees, then you might be able to get a valuable tax credit.
Then again, if you have 50 or more employees, you may need to provide insurance. The deadline for this is 2015.
For more on this, check out:
Even if you have health insurance, the coverage could be skimpy. To deal with this, there are two main options: