Can you deduct self-employed health insurance premiums?
As a self-employed individual, you’re allowed to deduct the entire annual self-employed health insurance premium that you paid for yourself, your spouse and your dependents from your taxable income, regardless of whether you itemize your deductions or not. Since health premiums are often expensive, taking them as a deduction can considerably reduce your taxable income, saving you money while you make sure you're medically protected.
Just remember that you cannot deduct annual premium payments that amount to more than your annual income in a tax year. If your premiums end up costing more than your income, you can claim the health insurance deduction up to your annual income amount. For the remaining excess premium costs, you may be able to claim them as medical expenses in your Schedule A, where you list deductions for your annual tax filing. If your expenses were greater than your income for the year, you won’t be able to claim this deduction.
You may not be eligible to deduct your health insurance for self-employed premiums if:
- Your spouse or live-in partner has a job that extends their healthcare benefits to cover you, but you have refused the coverage
- You are self-employed but have secured another job that offers a health plan
- You are eligible to participate in your employer’s health insurance plan but opt not to.
The Internal Revenue Service has outlined the requirements that policy premiums must meet for a self-employed person to claim them as a health insurance tax deduction.
If you experience a Qualifying Life Event, you can receive health insurance for self-employment under Special Enrollment, which qualifies as a tax deduction.
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