Health insurance premiums are deductible if you itemize your tax return. Whether you can deduct health insurance premiums from your tax return also depends on when and how you pay your premiums: You’ll need to review your paycheck stub to determine when you pay for health insurance. Also, if you have pre-tax amounts withheld from your paycheck for your insurance, the amount on your W-2, Box 1 won’t include the cost
of your health insurance. So, your income is already adjusted for the cost of your health insurance. If you’ve paid premiums with after-tax money, include these payments:
Also, you can include long-term care insurance, up to these limits for 2019:
Don’t include these payments:
Related TopicsThere are tax benefits available to self-employed individuals who pay health insurance costs. Self-employed taxpayers can deduct 100% of their health insurance costs in computing their income taxes. Let’s review the tax rules on health insurance premiums. Health insurance premiums paid by non-self-employed taxpayers are deductible as itemized medical expense deductions, but only to the extent your total medical expenses exceed 7.5% of your adjusted gross income (AGI). For tax years ending after 2018, medical expenses will be subject to a 10%-of-AGI floor, instead of the 7.5%-of-AGI floor. Because of the “floor” that applies to the medical expense deduction, if total medical expenses don’t exceed 7.5% of AGI (or 10% after 2018), no itemized deduction is available. Also, with the increased standard deduction there will be fewer taxpayers that can itemize so it more advantageous to deduct these premiums through the business if possible. A self-employed taxpayer can deduct medical insurance premiums -as an “above the line” deduction, reducing taxable income for 100% of the health insurance costs for the taxpayer, spouse, and dependents. The health insurance deduction for self-employed taxpayers only applies for any calendar month in which you aren’t otherwise eligible to participate in any other subsidized health plan. Also, the deduction can’t exceed your earned income from the trade or business for which the health insurance plan was established. These rules also apply to sole proprietors, partners in partnerships and more-than-2% shareholders of S corporations where the company pays for health insurance coverage for its owners, partners or shareholders. The tax benefits of a self-employed individual’s health insurance costs can effectively reduce your cost of health insurance. You may wish to consider stepping up your coverage considering these savings. Contact us if you wish to discuss how these rules apply to your particular situation or if you have any questions. This is another Question ForMy Account. If you have a question or need personal income tax services in Clearwater, Largo, Dunedin, Oldsmar, Lutz or Land O’ Lakes, contact FMA, C.P.A. and let us show you the way! |