Without the 105 plan, what tax deductions does a Sole Proprietor or Partner allow?
Without the plan, Sole Proprietors or Partners could deduct, at most, only 45% of their current health insurance premiums incurred in 1998. This percentage could change for later years. Please check with your tax preparer. If you itemize deductions and your medical expense is more than 7.5% of your adjusted gross income the deduction is the excess amount over 7.5% of Adjusted Gross Income. Example: Adjusted Gross Income $40,000 x 7.5% = $3,000. Expenses must exceed $3,000 to receive a deduction. (With the 105 you have 1st dollar deduction.) What business / companies can have a plan? The following types of businesses are eligible: Sole Proprietorships Partnerships Subchapter S Corporations (but only for employees who own 2% or less of the Corporation. Subchapter S can sponsor a plan for other employees but the owner and spouse or family members may not participate.) Subchapter C-Corporations LLC`s and LLP`s What are my responsibilities? For sole proprietors and partnerships, your spouse
