Self Employed Health Insurance Deduction
Self Employed Health Insurance Deduction.
We’re talking about self-employed health insurance deduction, did you know that if you pay accident and health insurance premiums for yourself for your spouse for your dependents.
You can actually take that deduction on the first page of your 1040 and above the line deduction which can give you huge tax savings versus taken the same deductions as part of your itemized deduction on Schedule A which can limit your deductions to whatever exceeds seven and a half percent of your adjusted gross income.
Now there are certain limitations because the IRS looks at your situation on a monthly basis.
Now if you were eligible to participate in an employer health insurance group then you cannot take that deduction either you or your spouse if you are eligible to participate in an employer plan then you cannot take that deduction if you have a loss from your self-employment earnings.
Then you cannot take that deduction you have to take it from their schedule you need to have profits you need to have net earnings.
Now for you to take the deduction the policy must be either established or considered established under the IRS.
If you are self-employed that files Schedule C the policy can be either in your name or it can be in the business name.
If you are a partner in a partnership and the policy is under the business name and the business pays for the premiums then that this is good that amount however will be included as guaranteed payments under your schedule k-1.
Now if you are the one that pays for the premiums then the business must embarrass you for the amount that you pay for the premiums and in the same way that amount would be included as guaranteed payments under schedule k-1.
Now, if you are an owner in the S corporation or if you own more than two percent in an S corporation then the policy would be either established open established.
If the policy is under the business and the business pays for the premiums or the policies under your name and you pay for the premiums however the business must reimburse you for the amounts that you have paid for the premiums that amount of premiums that you have paid or the business face must be included as gross income for you under box one.
When your w-2 subject to federal income tax but not subject to your FICA taxes now remember those are for your premiums deductions.
If you have paid any other medical expenses such as co-payments or drugs or any other out-of-pocket medical expenses those need to go under your itemized deduction under Schedule A they cannot be deducted on the first page.
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