QA 73 – Josh Bauerle Answers "Can I Write off Health Insurance Costs on my Taxes?"

In today's Q&A, we are helping Preston figure out health insurance as an entrepreneur and how it can help him save on taxes. Do you have a question you want answered on our podcast? We would love to help you! Click here to ask your question! [Tweet "Learn what to do with health insurance costs on your taxes with @CPAonFire"] Resources Mentioned in this Episode Today's expert is Josh Bauerle from CPA on Fire Today's question is from Preston from Graphic Design Blender Last time Josh was on Flipped Lifestyle Let's dive into this week's question! JOCELYN: Hey y'all! You're listening to an Expert Q&A with S&J. Today's expert, Josh Bauerle of cpaonfire.com Welcome to the Flipped Lifestyle podcast where life always comes before work. We're your hosts, Shane and Jocelyn Sams. Join us, each week, as we teach you how to flip your lifestyle upside-down, by selling stuff online. Are you ready for something different? All right, let's get started. SHANE: What's going on guys, welcome back to the Flipped Lifestyle Q&A with S&J. We have another Expert Q&A for you guys today; we have an awesome guest on, his name is Josh Bauerle, and he is from cpaonfire.com. Josh, welcome to the program. JOSH: Thank you, glad to be back. SHANE: And you may remember Josh, we had him in a long episode talking about running his online business. His wife was on with him, a great episode, we'll put that on the show notes and today we have him on to answer a tax question because Jocelyn and I are scared to death to answer anything about accounting and taxes. JOCELYN: And for good reason. SHANE: For good reason, okay? So Jocelyn, do you have a question for Josh? JOCELYN: Yes, and it is from Preston, and Preston is from graphicdesignblender.com, and says, "Hey guys, you all are so inspiring. Congratulations on all the success; I have a question for you, one of the biggest fears I have faced from quitting my job is losing our insurance. How did you guys bridge that gap? Also, will buying private health insurance save me anything on taxes? Can I write that off?" SHANE: And this was a huge question that we had too because we were teachers, the State was basically – our jobs were paying for our insurance and we had no clue how this would impact us or the taxes. So josh, why don't you tell Preston a little bit about that and how switching to private insurance can impact what he pays on taxes. JOSH: Absolutely, and you guys have been much better experts at the part about getting private insurance, but I'll go over the tax benefits here. So, this is actually one area that is actually a huge benefit to be an entrepreneur. So typically, if you are going to get private insurance, the only way there can be a tax deduction is to write them off in what they call 'itemized deductions' and medical expenses are super-hard to take as an itemized deduction. Basically in the simplest terms possible, they are going to reduce it by 10% of your income, and then you can only take the amount over that. So, if you made 100,000 dollars, they would immediately take off 10000 dollars of your insurance costs and then you can only take the amount over top of that. So that's if you are an employee. As an entrepreneur, if you have a business that makes money, you can write off those insurance costs against the revenue in your business, all right? So, let's say that you made the same 100,000 dollars, as an entrepreneur you paid 20,000 dollars in insurance, and now it's gonna look like you made 80,000 dollars instead of 100,000. SHANE: This will save you a fortune really, ain't it? JOSH: It is and one key here to remember though is that's if you made money in your business. So if you are showing a loss in your business, you are not going to be able to write that off. SHANE: Wow, so you can't just start a random business and not make a dime, and actually claim anything for your health insurance stuff. JOSH: Exactly,