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What is the Self Employed Health Insurance Deduction?

If you are self-employed or were self-employed during any time of the past year, it is possible that you are able to deduct your medical and dental insurance coverage that you paid for. The tax deduction is called the self employed health insurance deduction.

Do I qualify for the self employed health insurance deduction?

If you are or were self-employed, you are eligible. Besides yourself, your spouse and any dependents [1] can qualify as well.

You can only claim this deduction if you were not eligible to take part in an employer-subsidized health plan of your own or your spouse’s.

Self Employed Health Insurance Deduction Rules

The only health insurance premiums that can be written off are for the months when both you and your spouse were not eligible to participate in an employer-subsidized health plan. For example, if your spouse worked for 6 months at a job that offered the option to join the insurance plan, you both are not eligible to claim those months. In addition:

  • Your deduction cannot exceed the income you collect from your self-owned business.
  • You cannot claim your health insurance costs if you are reporting a tax loss [2] from your self-employment job. However, you still can claim the cost of your health insurance as an itemized medical deduction [3].
  • You do not need to itemize medical expenses [4] to take the deduction. However, if you claim the self-employed health insurance deduction you must reduce your Medical and Dental Expenses deduction on Schedule A [5] by the same amount.

Where can I find the self employed health insurance deduction?

The deduction is included on Form 1040, line 29. It may be helpful to look at Publication 535 [6] for more information on the self employed health insurance deduction.

More Self Employed Tax Topics