The State Small Business Credit Initiative Act (see more details at OpenCongress) has two major provisions aimed at micro-businesses and the self-employed.
In the House version, it would allow sole proprietors to take a one-year business deduction for health care costs. At this point, sole proprietors have been able to deduct their health insurance premiums as an “above-the-line” deduction against their income taxes but not their self-employment taxes. While only a one-year deduction, this could be the shot in the arm that is needed for the 23 million self-employed business owners in our country.
In the Senate version, the full deduction for self-employed health insurance seems to have disappeared, but another welcome change was introduced by Senator Barbara Boxer of California. She proposed an amendment that would create a standard home office deduction, dramatically reducing the complexity of claiming a deduction for an office in your home.
After months of bailouts and stimulus packages that seem to help Wall Street more than Main Street, it’s refreshing to see some legislation aimed at supporting the “solopreneurs” out there! Let’s just hope that these provisions remain in the bill as it’s signed into law!
Deb Howard Greenleaf, EA, CEO and Principal, of Greenleaf Accounting Services provides virtual accounting and bookkeeping services and specializes in financial management to consultants, coaches, solo professionals, and other small business owners across the US. Deb is an Enrolled Agent (EA)—an IRS-licensed tax professional—and specializes in small businesses and entrepreneurs filing Schedule C or as an LLC. As an Advanced Certified QuickBooks ProAdvisor, Deb spends her day in QuickBooks Online and specializes in providing QBO support.