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Juan, who is single, is a self-employed carpenter as well as an employee of Frame It, Inc
Juan, who is single, is a self-employed carpenter as well as an employee of Frame It, Inc. His self-employment net income is $32,175, and he received a W-2 from Frame It for wages of $22,750. He is covered by his employer's pension plan, but his employer does not offer a health plan in which he could participate.
Required:
- Up to how much of his self-employed health insurance premiums could he deduct for this year, if any?
- How much of Juan's self-employment taxes would be deductible?
Expert Solution
a.)
Juan can deduct up to 100% of his self-employed health insurance premiums. The only restriction of the two doable restrictions in regards to this deduction, that implies to Juan is that he can deduct premiums only up to $32,175. $32175 is Juan's net business income from self-employment.
b.)
As an above-the-line deduction, Juan's self-employment taxes would be deductible 50%.
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