Richard A. Lindsey, CPA

Lindsey & Waldo, LLC – Certified Public Accountants

  • Mar 24

    Thousands May be Eligible to SAVE MONEY With This NEW Tax Deduction But Never Know About It

    You’re about to discover the secret to deducting more than you actually paid for health insurance last year. Normally, you know, that’s not legal.  No I’m not some crazed man. But I am just “going crazy” trying to get the word out about this new amazing health care deduction that works like crazy. (Ok. Enough already.) Actually I’m a CPA and a small business owner – have been for nearly 20 years so I’ve checked this out. After all, when you own a small business you look for every legitimate tax break you can get. Maybe you’re different, but most people are not interested in paying any more to the Tax Man than they legally have to.  You may be able to legally deduct 150% of what you paid in Health Care premiums last year IF you qualify. But you can’t take a deduction you don’t know about so be sure you’re not one of the ones who are going to miss out!

    To be a competitive employer and hire talented employees a small(er) employer must generally offer benefits.  This usually includes vacation days, sick days, and often health care insurance coverage.  With the skyrocketing cost of health insurance it’s difficult for many small businesses to offer this. 

    “The cost [for health care premiums] is just astronomical for a small business,” according to Lynda Burkett, owner of Mobile’s Marshall A. McLeod Land Surveyors. However, for some employers in Alabama it may have become a little easier in 2009. Back in June 2008, Alabama Governor Bob Riley signed a bill into law that expanded the tax deduction small businesses can take for their employee’s health care costs but almost nobody has written or talked about it since. (That’s where I come in.)

    The Small Business Health Insurance Premium Deduction Enhancement Bill, which was effective January 1, 2009, allows qualified small business owners to deduct 150 percent of the amount they paid for a qualified employee’s health care insurance premium from their Alabama state tax return.  In addition, the bill also allows qualified employees of those qualified businesses to deduct 150 percent of what they paid for health care insurance.  Both the employer and the employee can qualify for this NEW deduction. So what everyone wants to know is “what qualifies a small business and an employee”?

    • A qualified small business is one that has less than 25 simultaneously paid full time employees.  No part-time employees are considered.  There is no income limitation.  This seems pretty straightforward.
    •  A qualified employee is an Alabama resident that works for a qualified business.  Also, this employee can not earn more than $50,000 in wages and can have no more than $75,000 of adjusted gross income on the Alabama individual income tax return ($150,000 if married filing joint).  This too sounds clear.
    Keep going… It’s as simple as 1, 2 

    It seems fairly uncomplicated from the above descriptions to know who is qualified to take these deductions.  However, because the employer can only take the deduction for qualified employees and the qualified employees can only take the deduction if they work for a qualified employer, the tricky part of this deduction is in knowing who is qualified.    

    It may be little easier for an employee to know if the employer qualifies than for the employer to know if the employee qualifies.  All the employee has to do is look around — were there are less than 25 employees at any given time.  However, for employers to know the Alabama adjusted gross income of their individual employees is a little tougher.  So what is the solution?  The solution lies in communication by both parties. 

    If your small business qualifies, it’s as simple as 1, 2:

    1. Give each potentially qualifying employee a statement that you are a qualifying employer and
    2. Ask each to sign a statement indicating whether they are or are not a qualifying employee.

    Yes, I know it should be 1, 2, 3. But it’s just that simple!  Just 1, 2. No fine print. You don’t need to know the specifics of their income situation, just if they qualify.

    If you think your employer qualifies, it’s as simple as 1, 2, 3: 

    1. Give your employer a copy of this or direct him/her to this website,
    2. Ask your employer for a signed statement indicating they are a qualifying employer, and
    3. Give your employer a signed statement indicating you are a qualifying employee.

    It doesn’t get much easier than that. But, here’s easier: I have sample statements for you.

    If I prepared these statements just for you from scratch I’d charge you $95.00.  Then I solicited an opinion from my attorney on the wording. That’s not included in the $95.00 because I haven’t seen a bill from him yet. But I’m going to make them both available to you for the remarkably low price of $29.95 only because I had to do them for myself anyway. If you’d like to get a copy of both the employer and employee statements I’m using call my office at 251-633-4070 or e-mail your request to Zevac.lindsey@comcast.net.

    P.S.  Now that you know the SECRET to deducting 150 % of your health care premiums, don’t let this one get away! This is a great deduction opportunity from the State of Alabama that both small businesses and their employees can take advantage of without any additional costs.

    P.P.S.  Wouldn’t you rather have a CPA who was helping you keep your hard earned money instead of sending it to the tax man? Something to consider.

    P.P.P.S. Why reinvent the wheel? I GUARANTEE the statements I’m using to pass muster with the Tax Man or TRIPLE YOUR MONEY BACK! If you’d like to get your copy of both the employer and employee statements I’m using in my business for only $29.95 so you don’t have to worry if the wording will be acceptable to the Tax Man, call my office at 251-633-4070 or e-mail your request to Zevac.lindsey@comcast.net.