Self-Employed Health Insurance Deduction
For 1998, this deduction for the self-employed is increased from
40% to 45% of the amount you paid for medical insurance for yourself and
your family. For more information, see chapter 10 in Publication
535.
Self-Employment Tax
The self-employment tax rate on net earnings remains the same for
calendar year 1998. This rate, 15.3%, is a total of 12.4% for social security
(old-age, survivors, and disability insurance), and 2.9% for Medicare (hospital
insurance).
The maximum amount subject to the social security part for tax years
beginning in 1998 has increased to $68,400. All net earnings of at least
$400 are subject to the Medicare part.
Former insurance agents. Certain payments
made to former insurance agents after 1997 by an insurance company for
services performed for that company are exempt from self-employment tax
if all the following requirements are met.
- The amounts are received after the agent's agreement to perform
services for the company has ended.
- The agent performs no services for the company after the service
ends and before the end of the tax year.
- The agent enters into a covenant not to compete against the company
for at least the 1-year period beginning on the date the service agreement
ended.
- The amount of the payment depends primarily on policies sold by
or credited to the account of the agent during the last year of the service
agreement or on the extent to which those policies remain in force for
some period after the service agreement ends, or both.
- The amount of the payment does not depend to any extent on the length
of service or overall earnings from services performed for the company
(regardless of whether eligibility for payment depends on the length of
service.)
More information. For more information
on self-employment tax, see Publication
533, Self-Employment Tax.
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