Self Employment Health Insurance Deduction

If you are self-employed, you may be able to deduct monthly health insurance premiums on income tax returns. While you will not save a lot, this deduction in conjunction with other deductions can reduce your income tax. Self-employed health insurance deductions may be claimed by self-employed individuals, partners within a business, and those who have stock and earn wages in an S corporation.

What is Self-Employed Health Insurance Deduction?

• The self-employed health insurance deduction allows self-employed worker to deduct the cost of monthly health insurance premiums when calculating their income tax.

  Self-employed people have to pay a self-employment tax in addition to income tax. Company employees generally pay a portion of their taxes to fund Social Security and Medicare, with the employer also paying a portion. The self-employed must pay both portions and complete self-employment tax and income tax forms when filing their tax return.

  The self-employment health insurance deduction helps offset these costs by giving business owners, partners and others who qualify for an income tax credit.

How to Claim Self-Employed Health Insurance Deduction

• To claim the self-employed health insurance deduction, you must meet the following criteria: You are a self-employed individual (a 1099 contractor), a partner or co-owner of a business, or a shareholder who earns wages and has at least a 2% stake in an S corporation. Refer to IRS.gov for more information about the appropriate tax forms to file.

  Health insurance plans must be established for your business. If you are under your spouse's insurance plan, you will not be able to claim the deduction.

Long-term Care Insurance Deduction

• If you purchased a long-term care insurance policy for your spouse, yourself or legal dependents, you may claim the premiums on your income tax return.

  Long-term care insurance is typically used to pay for nursing home or home health care for those who are unable to care for themselves. Adult day care, long-term care for illnesses, rehabilitation, and hospice care are usually covered under long-term care policies.