The IRS Self Employed Health Insurance Deduction

When you are self-employed, you will most likely need to look for every tax deduction that you can find. Since self-employed individuals have to pay extra taxes in the form of the self-employment tax, getting extra tax deductions can be helpful. If you pay for your own health insurance, you may be entitled to such a deduction.

Self-Employed Health Insurance Deduction

• When you are self-employed, the amount of money that you pay in premiums for a health insurance plan is deductible. This means that you can add up the total amount of premiums that you have paid for the year and then subtract that amount from your taxable income. When you deduct this from your taxable income, it helps to lower your tax liability overall. It could also help put you in a lower tax bracket for the year.

Eligibility

• Being self-employed does not necessarily mean that you automatically qualify for the self-employed health insurance deduction. Before you can take this deduction, you may want to consult with a tax professional. If you claim this deduction, you cannot be eligible for being included on any other group health insurance plan. For example, if you work for an employer with a group plan but you buy your own insurance, you would not be eligible for this deduction.

Long-Term Insurance

• Besides getting a tax deduction for regular health insurance, you can also possibly get one for long-term care insurance. Long-term care insurance is a type of insurance product that you can buy that will help you pay for bills related to long-term care. When you are self-employed, the Internal Revenue Service (IRS) allows you to deduct part of the premiums that you pay for this type of insurance. The amount of money that you deduct will depend on how old you are.

Profit

• If you want to take this deduction, your business has to be operating at a profit. When you calculate your taxes, the business has to have a total business profit for that tax year. If the business is not in profit for the year, you will not be able to take the deduction. The IRS will not continue to give you deductions for the year if you are already losing money.