Are Health Insurance Premiums Tax-Deductible?
Self-Employed Milford, NH Resident Has Questions
Self-employed individuals are able to deduct all premiums paid for health insurance. This deduction is not available if the individual is eligible to participate in an employer’s health care plan but chooses to decline. If you qualify for coverage under a spouse’s healthcare plan but decline this also, the tax deduction is ineligible. Keep in mind that self-employed individuals are not able to deduct more than their generated income in a single calendar year.
A Milford resident was venturing out on his own, starting a business. Concerned about the high cost of healthcare, he contacted Merrimack Tax Associates with questions about the eligibility of this expense as a tax deduction.
Deducting Qualified Unreimbursed Healthcare Expenses
Many Americans receive healthcare through an employer or spouse’s employer. In this scenario your portion of insurance premiums are taken out of pre-tax dollars. For this reason, the insurance premiums paid through your employer are not tax-deductible. You can, however, deduct some unreimbursed healthcare expenses. Keep in mind that this deduction is only available if the total exceeds 10% of your adjusted gross income.
Self-Employed Individuals Can Deduct Healthcare Premiums
Those self-employed individuals, that are not eligible for an employee sponsored healthcare plan through themselves or through a spouse, can deduct the premiums paid for health insurance. It is not necessary for this total to exceed 10% of your adjusted gross income when self-employed. This healthcare deduction is considered a write-off when filing personal taxes and cannot be deducted as a business operations expense.
The Milford resident was the sole supporter of his family, and therefore had no other employer-sponsored healthcare options available. For this reason, he is able to deduct all insurance premiums paid in the calendar year, making a sizable dent in his tax bill.