How to Calculate Your Self-Employed Health Insurance Deduction

The health insurance deduction is one of the biggest tax breaks for the self-employed.

If you’re self-employed, you can deduct the cost of your health insurance premiums on your federal income tax return. This deduction can be a big money-saver, so it’s important to know how to calculate it correctly.

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What is the self-employed health insurance deduction?

The self-employed health insurance deduction is an above-the-line deduction for self-employed individuals and more than 2% S corporation shareholders who pay for medical insurance premiums. This deduction is available even if you do not itemize your deductions on Schedule A (Form 1040).

To claim the deduction, you must complete Form 1040, Schedule 1. The amount of the deduction is subject to certain limitations. For 2017, the maximum deduction is the lesser of:
· Your net earnings from self-employment (line 4 of Schedule SE (Form 1040)), or
· The amount of premiums you paid for medical and dental insurance and long-term care insurance for yourself, your spouse, and your dependents.

Who is eligible for the deduction?

The self-employed health insurance deduction is available to anyone who pays for health insurance and is not eligible for coverage through an employer-sponsored health plan. This includes sole proprietors, partners in partnerships, and LLC members, as well as S corporation shareholders who own more than 2 percent of the company.

How much can be deducted?

As a self-employed individual, you may be eligible to deduct the cost of your health insurance premiums on your federal income tax return. The amount you can deduct depends on a number of factors, including your modified adjusted gross income (MAGI) and the type of health insurance coverage you have.

To calculate your deduction, you will need to know your MAGI and the amount you paid for health insurance premiums during the year. You can find both of these numbers on your federal income tax return.

Once you have both numbers, simply subtract your MAGI from the total amount you paid for health insurance premiums. The resulting number is the amount you can deduct from your taxes. For example, if your MAGI is $50,000 and you paid $5,000 in health insurance premiums during the year, you can deduct $5,000 from your taxes.

What expenses are eligible for the deduction?

You can deduct the cost of health insurance for yourself, your spouse, and your dependent children if you are self-employed and pay for the coverage yourself (rather than through a employer-sponsored plan). This deduction is available even if you do not itemize other deductions on your tax return.

In order to calculate your deduction, you will need to know the total amount you paid for health insurance premiums during the year. This information should be available on your health insurance billing statements or in a Summary of Benefits and Coverage document from your insurer. Once you have this information, simply subtract any reimbursements or tax credits you received during the year (for example, from a Health Savings Account) and enter the remaining amount on line 29 of Form 1040.

How do I calculate my deduction?

If you’re self-employed, you can deduct the cost of your health insurance premiums on your federal income tax return. This deduction is available whether you purchase health insurance through the Marketplace or directly from an insurance company.

To calculate your deduction, use Form 1040, Schedule C, line 29. You’ll need to know the total amount you paid in health insurance premiums for yourself, your spouse, and your dependents. You can’t deduct more than the amount of net profit shown on line 31 of Schedule C.

What if I have multiple health insurance policies?

Figuring out your self-employed health insurance deduction can be tricky, especially if you have multiple health insurance policies. Here’s what you need to know.

If you’re self-employed and have multiple health insurance policies, you can deduct the total amount of premiums you paid for all the policies. For example, let’s say you have a policy through your spouse’s employer and one that you purchased on your own. You can deduct the total amount of premiums you paid for both policies.

The amount of the deduction is subject to the same adjusted gross income (AGI) limitations that apply to other medical expenses. So, if your AGI is more than 10% of your total medical expenses, you can only deduct the portion of your medical expenses that exceeds 10% of your AGI.

What if I am covered by my spouse’s health insurance?

If you are married and your spouse is also employed and you are both covered by a health insurance plan sponsored by your spouse’s employer, you cannot deduct the cost of your health insurance premiums as a self-employed individual. However, if your spouse is not employed, or if your spouse’s employer does not offer health insurance coverage, you may be eligible to deduct the cost of your health insurance premiums as a self-employed individual.

What if I am covered by Medicare or Medicaid?

You may not deduct premiums you pay for Medicare coverage, nor can you deduct premiums for any health insurance plan if you are also covered by Medicaid or another government-sponsored health care program.

Can I deduct my health insurance premiums if I am not self-employed?

No, you cannot deduct your health insurance premiums if you are not self-employed. The deduction is only available to those who are self-employed and pay for their own health insurance.

What other tax deductions are available for the self-employed?

As a self-employed individual, you are eligible for a number of different tax deductions that can reduce your overall tax liability. In addition to the deductio