While nationalized healthcare continues to be this young decade’s political event, there are still those of us who, whether self-employed or who work for businesses that don’t offer healthcare, pay for our own healthcare. Here’s some tax tips for we brave souls on the frontier of the healthcare debate.
Self-employed Health Insurance Tax Deductability
According to about.com,, prior to claiming this deduction, you must first “calculate your allowable health insurance deduction. Take your self-employment income, and subtract the 50% deduction for self-employment taxes, and subtract any retirement contributions you make to SEP-IRA, SIMPLE-IRA, or Keogh plan. The remainder is your allowable deduction for health insurance expenses.”
The Tax Deduction that Pays Off
On to the deduction! First, and most important: you can deduct the full cost of health insurance you pay for yourself, your spouse, and/or your dependents. If you’re not, go over your taxes right now. You claim your health insurance deduction as an “above the line” deduction on Form 1040, line 29. Feel free to use your worksheet on this one.
But Don’t Go Over Your Maximum Tax Deduction!
Remember, however, you can’t deduct insurance costs any time you were eligible to be in a group insurance plan. So: if you or your husband work for a company that offers an insurance plan, you’re out of luck, even if you prepaid for your insurance prior to getting a job at a company that offers the group plan. Example: today, as a self-employed father of three, you buy a 1-year policy for yourself and your family. But, five months later, your wife gets a job where group insurance is offered as part of the package. In this example, you may only deduct five months’ worth of the cost of the insurance. The government doesn’t reward the self-insured, unfortunately.
Tags: employee benefits taxes, health insurance premium tax deductibility, health insurance taxes
This entry was posted on Tuesday, January 12th, 2010 at 6:39 pm and is filed under taxes.- Unlimited live support.
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