Can I Deduct My Health Insurance Premium? A Guide

You're curious about deducting your health insurance premium? Well, it's a great question! According to the IRS, you can deduct your health insurance premiums if you're self-employed or have a small business.

The key is to itemize your deductions on your tax return, which can be done if your total itemized deductions exceed the standard deduction. This includes medical expenses, including health insurance premiums, that exceed 10% of your adjusted gross income.

The good news is that you can deduct your health insurance premiums even if you're not self-employed, but there are some limitations. For example, if you're covered under a group plan through your employer, you can only deduct the premiums if you're not claimed as a dependent on someone else's tax return.

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If you purchased your own health insurance, you may be eligible for a tax credit. You don't qualify for this credit if you or your spouse had the option to get health insurance through an employer or former employer, even if you chose not to use it.

This website is provided for general guidance only, so it's not a substitute for professional tax advice.

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You can deduct your health insurance premium if you're self-employed and pay for your own coverage, or if you're an employee who pays for family coverage.

Self-employed individuals can deduct 100% of the cost of health insurance premiums paid for themselves, their spouse, and dependents.

If you're an employee, you can deduct the cost of premiums paid for yourself and your family, but not any portion paid by your employer.

To qualify for the self-employed health insurance premium deduction, you must be self-employed, have a business profit, and not be able to receive health insurance coverage from a spouse or employer.

You can only deduct the cost of your health insurance premiums if you pay for it yourself, and not if your employer pays for it.

The amount of your premium that's tax-deductible depends on your employment status. If you're self-employed, you can deduct 100% of the cost of health insurance premiums paid for yourself, your spouse, and dependents.

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If you get your health insurance through the marketplace and receive a subsidy on your monthly payments, you can only deduct the cost of your bill every month, not the original price of your plan.

Here's a summary of the health insurance premium deduction rules:

Note: Business profit is your business income after business expenses, which you can find on Line 31 of your Schedule C.

If you get your health insurance through your employer, it's likely that your premiums are deducted from your paycheck before taxes are taken out. This means you can't take a tax deduction for those premiums when you file your tax return.

Most employers pay the majority of the premium, and you pay the rest. In almost all cases, the premiums you pay are deducted from your paycheck pre-tax.

Since your employer is paying most of the premium, you might wonder if you can deduct the portion you pay. Unfortunately, because you've already paid those premiums with pre-tax dollars, you can't take a tax deduction for them.

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Most Americans under 65 get their health insurance from an employer.

Employers pay a large majority of the premium, with employees paying the rest. In almost all cases, the premiums are payroll deducted pre-tax.

You can't deduct your health insurance premiums on your tax return if they were already paid with pre-tax money throughout the year. This is because there's no "double-dipping" allowed.

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Premiums reported as wages on a W-2 are not subject to Social Security, Medicare (FICA), or Unemployment (FUTA) taxes. These additions to wages are included in the shareholder-employee's Box 1 (taxable wages) of Form W-2, Wage and Tax Statement, but are not included in Boxes 3 and 5.

To qualify for the health insurance premium deduction, there are specific requirements and conditions that need to be met. Deductions cannot be taken when they exceed the shareholder's earned income from the business providing the plan.

Here are the key requirements:

If a shareholder's spouse is eligible for an employer-sponsored plan, but the family gets better coverage through the plan offered by the S corporation, the health insurance premiums are not deductible. This was the case for Anthony, a married 2-percent shareholder, and his spouse, who were covered by a health insurance plan paid for directly by the S corporation.

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As a self-employed individual, you're in luck because you can deduct your health insurance premiums on your tax return. This is true regardless of whether you get your insurance through the exchange or in the individual market.

You can only deduct the amount you actually pay in premiums, so if you receive a premium subsidy in the exchange, you can only deduct your after-subsidy premium. This is to prevent "double-dipping", where you claim a deduction for the same expense twice.

If you're self-employed and have a health savings account (HSA), you can contribute up to $4,150 in 2024 if your HDHP covers just yourself, and $8,300 if it covers at least one additional family member.

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As a self-employed individual, you're likely no stranger to navigating the world of taxes and deductions. Self-employed individuals can deduct the health insurance premiums they pay to cover themselves and their dependents.

This is true regardless of whether you get your insurance through the exchange or in the individual market outside the exchange. Premium subsidies, also known as premium tax credits, are available in the exchange but not outside it.

You can only deduct the amount you actually pay in premiums, so if you receive a premium subsidy, you can only deduct your after-subsidy premium on your tax return.

As a self-employed individual, you have the flexibility to set up a health savings account (HSA) to save for medical expenses.

An HSA is a great way to save for medical expenses, and the contribution you make to it is 100% tax-deductible.

You can set up an HSA through your employer or on your own, and the contribution limits are quite generous.

For 2024, the contribution limit is $4,150 if your high deductible health plan (HDHP) covers just yourself, and $8,300 if it also covers at least one additional family member.

The contribution limits increase to $4,300 and $8,550 for 2025, respectively.

If you're self-employed, you can deduct 100% of the cost of health insurance premiums paid for yourself, your spouse, and your dependents. This is a great perk for independent workers who often don't have access to employer-sponsored health insurance.

The amount of your premium that's tax-deductible depends on your employment status. If you're an employee, you can deduct the cost of premiums paid for yourself and your family, but not any portion paid by your employer.

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As a self-employed individual, you can deduct what you pay for health insurance, up until the limit of your business profit. Your business profit is your business income after business expenses, which you can find on Line 31 of your Schedule C.

You may include the following amounts when calculating the credit: payments for a health benefit plan through an Affordable Care Act (ACA) marketplace, Medicare Plan A premiums, Medicare Plan B premiums, payments for healthcare plans offered by private insurance carriers approved by Medicare, and payments for a health benefit plan connected to Medicaid.

Here are the types of health insurance premiums that are tax-deductible:

If you receive a 1095-A form from your insurer and want to claim it as a deduction on Schedule A of Form 1040, you'll need to follow these steps:

1. Ensure that the total amount paid in premiums exceeds 7.5% of your adjusted gross income (AGI).

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2. Deduct the amount of any Advanced Premium Tax Credits (APTCs) that were paid to your insurer on Form 8962.

3. Add up all of the qualifying health insurance premiums paid by you and/or your family members, and enter this total on the line for "Medical expenses" on Schedule A of Form 1040.