There are
Two Types of Plans for the Unincorporated
Self-Employed Business Owner |
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Self-employed with
no employees |
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If you are a sole proprietor
you are allowed to deduct specific amounts from your income depending on the number of dependents you have. Your deduction limits are as follows:
$1,500 for yourself
$1,500 for your spouse
$750 for each child in your household under age 18
$1,500 for each child in your household who is over 18 years of age and still attending
school
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Example
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A family of four with two
children under 18 would be allowed a total $4,500 per year comprised of $1,500 for
each of the parents and $750 for each of the children.
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Self employed business (or unincorporated business) with arms length employees |
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If you have arms length employees
(unrelated to you) on a full time basis your family deduction will be determined
based on the coverage you provide to
your employees. In other words, the amount
that you can deduct must be equal to what your arms length employees are able to
deduct.
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Example
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If you determine a dollar
amount like $2,500 per year for your employee's family, then your family is also
allowed the same amount per year.
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