The Internal Revenue Service states that tax deduction is generally available to people who are self-employed.
So, the answer to the question “Is health insurance tax deductible for self-employed?” is yes. The deduction is for medical, dental or long-term care insurance premiums that self-employed people often pay for themselves, their spouse and their dependents.
Basically, “Deduction” for self-employed isn’t new.
If you buy your own health insurance, you should definitely know about the long-standing health insurance premium deduction for the self-employed.
Congress implemented a 25 percent deduction for self-employed health insurance premiums in 1987 and made it permanent in 1994. The self-employed received even better news in 2003 when premiums became 100 percent deductible.
The deduction – which you’ll find on Form 1040, Line 29 – allows self-employed people to reduce their adjusted gross income by the amount they pay in health insurance premiums during a given year. You’ll find the deduction on your personal income tax form, and you can file for it if you were self-employed and showed a profit for the year.
If you’re also eligible for a premium tax credit (premium subsidy), there are two methods that the IRS will let you use to determine your deduction and your tax credit.
You can’t take the premium deduction if you were eligible for a group insurance from your or your spouse’s employer.
You may be able to take this deduction if one of the following applies to you:
- You had a net profit from self-employment. You would report this on a Schedule C, Profit or Loss From Business, Schedule C-EZ, Net Profit From Business, or Schedule F, Profit or Loss From Farming.
- You had self-employment earnings as a partner reported to you on Schedule K-1 (Form 1065), Partner’s Share of Income, Deductions, Credits, etc.
- You used an optional method to figure your net earnings from self-employment on Schedule SE, Self-Employment Tax.
- You were paid wages reported on Form W-2, Wage and Tax Statement, as a shareholder who owns more than two percent of the outstanding stock of an S corporation.
Get Local Help
More savings means more financial stability. It is important to know all the great things you can get from your health plan. As your trusted health insurance agency, Health Plans in Oregon is here to provide full details on health insurance deductions for the self-employed and many more. If you have questions other than “Is health insurance tax deductible for self-employed?”, just ask us. Health Plans in Oregon can help you make sense of all of this new information without cost to you. Let us help you on getting health insurance deductions and many more! Reach us through 503-928-6918 or info@healthplansinoregon.com.
