How to Deduct Family Health Care Premiums Under Side Business
"No, not on schedule C, better. Its an ""above the line"" deduction (line 29 on your 1040). Here's the turbo tax article on it. The instructions for this line set certain limitations that you must take into the account, and yes - it is limited to the net profit from the business. One of the following statements must be true. You were self-employed and had a net profit for the year. You were a partner with net earnings from self-employment. You used one of the optional methods to figure your net earnings from self-employment on Schedule SE. You received wages in 2011 from an S corporation in which you were a more-than-2% shareholder. Health insurance premiums paid or   reimbursed by the S corporation are shown as wages on Form W-2. The insurance plan must be established under your business. Your   personal services must have been a material income-producing factor in   the business. If you are filing Schedule C, C-EZ, or F, the policy can   be either in your name or in the name of the business."
"In general, you are allowed to deduct up to $50/month per student (see page 4), but only if you aren't reimbursed. In your case, since you are receiving a stipend, the full $2000 will be treated as taxable income. But the question of ""is it worth it"" really depends on how much you will actually spend (and also what you'll get from the experience). Suppose you actually spend $1000/month to host them, and if your combined tax rate is 35%, you'll pay $700 in additional taxes each month, but you'll still profit $300 each month. If your primary motivation for hosting students is to make a profit, you could consider creating a business out of it. If you do that you will be able to deduct all of your legitimate business expenses which, in the above example, would be $1000/month. Keeping with that example, you would now pay taxes on $1000 instead of $2000, which would be $350, meaning your profit would now be $650/month. (Increasing your profit by $350/month.) You will only need to keep spending records if you plan to go the business route. My advice: assume you won't be going the business route, and then figure out what your break even point is based on your tax rate (Fed+state+FICA). The formula is: Max you can spend per month without losing money = 2000 - (2000 * T) e.g. if T = 35%, the break even point is $1300. Side note: My family hosted 5 students in 5 years and it was always a fantastic experience. But it is also a very big commitment. Teenagers eat a lot, and they drive cars, and go on dates, and play sports, and need help with their homework (especially English papers), and they don't seem to like bed times or curfews. IMHO it's totally worth it, even without the stipend..." Please. Say what you will about Trump, but let's not pretend the ACA was working, or that it was good for young people. It did *nothing* to rein in the healthcare and pharmaceutical corporate-cartels. Under the ACA, Americans still had the most expensive drug costs in the world.  Young people were also the group most screwed by the ACA. The entire plan rested on forcing young people to pay for the health care of boomers. One of the reasons the program was failing so badly is that young people turned out to not be stupid -- and they were opting out in numbers vastly higher than bean counters had predicted.   The ACA was literally written by health insurance companies and Big Pharma. Anyone who doubts this should pull up a chart of healthcare, insurance and pharmaceutical sector stocks for the time-period the ACA was signed. If the ACA had been anything other than a forced buy-in to an already ridiculously overpriced sector, those stocks would have cratered. Instead they soared. If you want to know who got screwed by the ACA, it was people under 35 -- whose healthcare spending *rose* per capita as a result of that atrocious tax.   And let's not forget that the annual price-tag for all of us was climbing by unsustainable rates every year. (Along with those fat healthcare stocks).  That turd was failing of its own accord. It was a terribly crafted bill. If you want to fix healthcare in the US you need to get rid of money in politics, and by cutting the absurd legal/financial protections granted to the insurance and pharmaceutical industries.  (Which by the way, Trump isn't doing either. We *still* don't have a candidate on either side of the aisle with the balls it takes to fix this extremely busted industry. And it starts with campaign finance reform) "It seems like a more commonly recurring issue on Reddit that people are referencing logical fallacies without really understanding them.  For reference: ad hominem attacks are personal attacks. They are person specific. You cannot make an ad hominem attack against a group of people, such as the poor.  Straw man attacks are when an argument is changed to something that it is not and then beaten down. It skews the topic at hand to something it is not.  When I make an assumption, clearly state it, and then ask a question based on it with the words ""if yes"", it is not a straw man by any definition. I was attempting to expand the argument to see how you view the rich vs. poor because the vast majority of arguments in favor of helping the poor come with the caveat that the rich should pay that price. A higher minimum wage is an example of that. Those greedy business owners need to pay it, am I right??  I would suggest that you do not refer to these logical fallacies until you fully understand them.  &gt;paint me as some guy that just ""doesn't understand how the real world works.""  This is basically the problem with your source, your arguments, and your personal position. You mention that you worked through high school and college. You didn't mention managing people, but even if you did I would be surprised if you managed long-term minimum wage transients. The kind of people who never rise above it. The majority of the workers around you probably were doing much what you did: using the job as a stepping stone.  Your source mentions most people are ""willing to work"", yet states that 46% are child care workers and 48% are home care workers. Do you know why? The government will pay relatives who get a simple home health care provider license to care for relatives who are on Medicare. Thus, their grandma requires ""care"" and their daughter or grandchildren provide said care for a fee paid by the government. The US government is literally paying people to take care of their family. It is relatively the same with child-care. It's disgusting.  That article is making the argument that they want to work. I don't think taking a part-time job caring for your family denotes a will to work. I build low-income housing. I actually deal with the tenants who do this kind of work on a personal level. You could not convince me that a 26 year old with two kids from two different fathers who on occasion provides ""care"" to their family members has a will to work. I see their daily lives. How does the government even check to see if the care is being provided? Is grandma going to lie? Nope...  I can assume that you don't manage minimum wage employees because it is nearly impossible. Good labor refuses to work at that price. The market is much higher. Depending on the job it is usually double or triple. The cleaning guy at my apartment building makes $12 an hour. I've paid minimum wage. The only people I pay that are day laborers, most of which have serious problems in their lives and even then it usually is more. Hell, I've seen a guy from the neighborhood pay as low as $25 a day to people looking for a fix.  You are constantly arguing that I look down on these people. It's not entirely wrong, but it's not about the wage. I am very friendly with the staff at the local McDonalds in one of the ghettos of Houston. The manager is a really nice guy. I asked him why certain positions kept turning over. He complained that it was hard to find people and he kept having employees no-show. This is minimum wage and they can't even show up. Do you really believe that people want to work when simple positions that require no skill cannot be filled?  You make it seem as though I am assuming the worst. It's quite the opposite. I am incredibly optimistic and giving, but with many people in the US it doesn't matter. You just don't see it on the day to day. You read a study that is incredibly biased and take it to the grave. There are many, many people in the US who do not want to work. They rely on government subsidies and refuse to improve their own lives. It will always happen, it's just a matter of what the government will try to do about it next.  *I forgot to mention. Houston has built more homes in the last 5 years every year. Houston almost built more single-family homes than the entire state of California in the year 2014. Thus, my painter is leaving one of the largest construction markets in the US to go to Seattle because he can't find people to paint a building." The mechanisms are also heavily influenced by sociopaths who are enamored with the power that comes with wealth. Sadly those who have gained tremendous wealth and prosperity and want to give back by providing opportunity for others less fortunate are very much in the minority. Others are just selfish douchebags that believe in the commoditization of things like health care, for example, when they, themselves, benefit from having the best health care afforded to them under different terms.   On another note, it's difficult to regulate free enterprise. Despite my observations in the preceding paragraph, I actually appreciate both sides of this issue. If you've earned your money through your own blood, sweat, and tears, who am I to tell you what to do with your money?   With that said, there are no simple answers. I go back to those whose greed and selfish personas that are the real issue. Capitalism isn't without its flaws. But when you combine it with d-bag motivation, you create a monopoly on wealth supported by d-bag policies and practices: golden parachutes, imbalanced compensation models, corporate money in politics, and many other things that are explicitly designed to preserve the wealth for the wealthy.   In conclusion, this really isn't about an economic model as it is about the motivations of sociopathic d-bags who can't be bothered to think of anyone but themselves. These people give a bad name to others who are wealthy and get unfairly lopped into the stereotypes that are most commonly associated with those of great wealth and prosperity. Can I work on 1099 from my own company instead of on W2? The reason is   on W2 I can't deduct my commute, Health Insurance and some other   expenses while on 1099 I think I can able do that. Since I am going to   client place to work not at my own office, I am not sure whether I   should able to do that or not. If you have LLC, unless you elected to tax it as a corporation, you need neither 1099 nor W2. For tax purposes the LLC is disregarded. So it is, from tax perspective, a sole proprietorship (or partnership, if multiple members). Being a W2 employee of your own LLC is a bad idea. For all these above expenses, which can I use company's debit/credit   card or I need to use only my personal debit/credit card? It would be better to always use a business account for business purposes. Doesn't matter much for tax per se, but will make your life easier in case of an audit or a legal dispute (limited liability protection may depend on it). If I work on 1099, I guess I need to file some reasonable taxes on   quarterly basis instead of filing at year end. If so, how do I pay my   tax on quarterly basis to IRS? I mean which forms should I file and   how to pay tax? Unless you're a W2 employee, you need to do quarterly estimate payments using form 1040-ES. If you are a W2 employee (even for a different job, and even if it is not you, but your spouse with whom you're filing jointly) - you can adjust your/spouse's withholding using form W4 to cover the additional tax liability. This is, IMHO, a better way than paying estimates. There are numerous questions on this, search the site or ask another one for details. Using the http://calculators.ato.gov.au/scripts/asp/simpletaxcalc/main.asp calculator and noting all the caveats (Medicare etc) and assuming everything is proportionate you get: You earn: $110,000 less $28,647 tax = $81,353 She earns: $54,000 less $9,097 tax = $44,903 Total net: $126,256 You earn: $88,000 less $20,507 tax = $67,493 She earns: $72,000 less $14,947 tax = $57,053 Total net: $124,546 So, there is about $1,710 in it per annum or $33/week. Long day care will be setting you back $75-185/day so this is pretty small beans. This is all back of the envelope stuff and probably worth paying a few hundred dollars to an accountant to work it all out. You're right. That's pretty much it. You get a deduction for any medical expenses above 10% of your Adjusted Gross Income. You also have to itemize your deductions; claiming the standard deduction won't do. You could probably see prices at one of the Obamacare websites.  I'm on Obamacare in Massachusetts, and the premiums for me ranged from about $300-600 per month.  For a couple, you just multiply by two (couples don't get any discounts over single people).  So for a couple, the cost is about $600-$1200 per month. I never looked at family prices because I don't have kids, but I think the family plans are not that much more than the plans for a couple.