David Kirkpatrick

March 1, 2010

Health care reform won’t help self-employed tax issue

As a self-employed freelance writer, I completely understand the pain of the odd taxes and hoops of red tape the IRS has put in front of the self-employed sole proprietor. Too bad none of the reform ideas floating around include helping those smallest of businesses.

From the link:

By a quirk in the tax code, self-employed workers who buy their own health insurance essentially pay an extra tax on their premiums. They’re the only taxpayers in the system who pay taxes on premiums, which count as a business expense for corporations and pretax income for employees. Because self-employed workers have no corporate employers to match their payroll tax contributions to Social Security and Medicare, they pay double the rate of wage and salary workers in a levy known as the self-employment tax equal to 15.3% of their net earnings. That’s on top of regular state and federal income taxes, and the income they spend on health premiums is not exempt.

The nation’s 9 million self-employed—sole proprietors with few or no employees, contract workers, and freelancers—constitute about 8% of the total U.S. labor force, according to the Bureau of Labor Statistics. (The Census Bureau counts 22 million sole-proprietors, but it’s not clear how many of those may be payroll workers as well.) “You correct this, think of the widespread health benefit you would give to so many people,” says Kristie Arslan, executive director of the lobbying group National Association for the Self-Employed (NASE), which represents the self-employed in Washington.


  1. I work for myself and gross (in a good year) at most $30,000/year. I have gone with no insurance for 11 years after i left the company and my Cobra ran out. I cannot afford insurance for myself but I make too much to get any help. I fall between the cracks and NEVER get discussed with all the talk about health reform.

    I’m basically healthy (57 year old woman) but I do take daily prescriptions and see the occasional Dr. and Dentist. I do not get certain tests done due to cost (colonoscopy even though everyone says you MUST once you hit 50 – who is going to pay that $3000 bill for me?).

    I wish at the very least that I could deduct my prescription and other medical costs on my taxes.

    Being single, no children therefore not a “family” self-employed w/no employees, a small income I (and all the other like me) are NEVER considered when these reforms/plans are considered. We truly are the forgotten minority. I’m sick of it but what to do…???

    Comment by tj — March 25, 2010 @ 4:59 pm

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