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| Health insurance is quite expensive and some self employed individuals must usually get their own health insurance coverage. Currently California conforms to federal tax law on almost every aspect of the self-employment health insurance deduction. California conforms to items which include items such as the IRC Section 36B refundable credit of coverage under a qualified health plan and the deductions allowed on federal Schedule A for out-of-pocket expenses. As a self employed individual you can generally take a deduction for medical, dental or long term care insurance premiums that you as a self employed person are obligated to pay for yourself since you have no employer to cover you. California conforms to most of the federal self-employed insurance deduction except for one thing. California does not allow a deduction for adult children who provide more than half of their own support. You do qualify to include coverage for your adult children under federal tax law and if you do have such a deduction on your federal tax return, you must adjust your California tax return by entering the amount of the federal deduction which pertains to the adult child’s amount of the medical insurance expense on the California Schedule CA, line 33, column C. |
| Student loan interest deduction |
| Student loans can help can be a huge help when attending school. With the high cost of attending college, many times being able to receive these student loans will determine if you will pursue your higher education or not. If you have student loans, keep track of your interest paid on those student loans so you can deduct the interest on your federal tax return. You may be able to deduct up to $2,500 of the interest you actually paid for the year. You have a gross income limitation which means that your interest deduction may be reduced if your gross income goes over a certain amount. Other than that, the other qualifications in order to claim the deduction are not too harsh. As long as you don’t file married filing separately or be able to be claimed on someone else’s tax return, you should be fine to claim the deduction. California mainly conforms to the federal tax law, except for issues involving residency status. If the taxpayer is a not a California domiciled military taxpayer, or a spouse of a non-California domiciled military taxpayer who resides in a community property state. If your student loan deduction for federal tax purposes involves any of these, enter the corresponding amounts on your California Schedule CA, line 33, column C to exclude the deduction from your California tax return. |
| Tuition and fees deduction |
| Talking about students and the tax benefits of being a student, federal tax law also allows another deduction for tuition and fees paid. In addition to claiming the tuition and fees deduction, you can use your fees expenses to claim the American opportunity tax credit or lifetime learning credit. If you have a business, you can also use these fees to claim a business expense and these expenses would otherwise qualify as a business expense for your business. As with the student loan interest deduction, you cannot be able to be claimed as a dependent by someone else or use the married filing separately filing status to claim the tuition and fees deduction. Anyways, this is all true for federal tax purposes and the maximum amount you can claim is $4,000 for qualified education expenses. However, this is not true for California. California does not have such a deduction. Therefore, if you have such a deduction on your federal tax return, you must reverse it for California tax purposes by entering the federal deducted amount on your California Schedule CA, line 34, column B. |
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Domestic production activities |
| Every country prefers their products to be produced domestically. Producing products at home means that more people will gain employment and more businesses will do business with each other at the local level. If you are a business owner, you may want to take advantage of the domestic production activities deduction. If you have qualified production activities within the United States including Puerto Rico, you have adjusted gross income, and you have paid W-2 wages to your employees, you may qualify for the domestic production activities deduction |
| Copyright © 2014 [Hera's Income Tax School]. All Annual Federal Tax Refresher Course rights reserved. |
| Revised: 07/09/15 |
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