What is a Self-Employed Health Insurance Deduction?
The self-employed health insurance deduction is a tax break that allows self-employed individuals to deduct the cost of their health insurance premiums from their taxes. This deduction can help self-employed individuals save money and reduce their taxable income. It can also help them pay for medical expenses that are not covered by their health insurance plan. By taking advantage of this deduction, self-employed individuals can reduce the amount of taxes they owe each year.
Are you self-employed? According to the IRS, you are considered self-employed if you relate to one of the following:
- You carry a trade or business as a sole proprietor or independent contractor
- You are a member of a business that carries a trade or business
- You are in business for yourself
We want to help you understand your options, so let’s review just how you can get those perks for the self-employed health insurance deduction.
What Exactly is a Deduction?
Let’s break this down to make it as simple as possible. It’s good to get back to the basics, so you always feel like you are making well-informed choices when it comes to any tax or health insurance information.
Tax deductions are a great way to reduce your taxable income and save money on taxes. A tax deduction is an expense that you can subtract from your total income to reduce the amount of tax you owe. Common examples of tax deductions include charitable donations, medical expenses, and business expenses.
Of course, in this article, we’ll be focusing specifically on health insurance deductions. Knowing how to use these deductions can help you save money on your taxes and ensure you are not overpaying.
We’ll go into all of the details you need to know, but we want to make it very clear that when it comes to self-employed health insurance deductions, this is strictly for your personal taxes, and your business does not qualify for the tax deduction.
Qualifying for the Deduction
First, we always want you to seek advice from a qualified professional, so you can make informed decisions about your and your family’s health insurance options. This will allow you the opportunity to ask plenty of questions, so you don’t have any surprises when it comes to your tax deductions.
It’s true, though—you and your family can qualify for this incredible benefit. That includes yourself, your spouse, and any dependent under the age of 27. As we mentioned above, this deduction is strictly personal, however, and it is not applied as a tax deduction for your business, so keep that in mind!
Uncle Sam definitely keeps a close eye on things, so before you start the process of figuring out how the self-employed health insurance deduction works, you’ll want to make sure you fit the following criteria:
- You must be self-employed: This means you must be a sole proprietor, a partner in a partnership, a member of a limited liability company (LLC), or an independent contractor.
- You must have earned income from your self-employment: To be eligible for the deduction, you must have earned income from your self-employment, and the income must be reported on Schedule C or Schedule F of your tax return.
- You must have a qualifying health insurance plan: The health insurance plan must be established under your business and must cover you, your spouse, and any dependents. The plan can be a policy in your name, your spouse’s name, or your business’s name. The plan must provide coverage for medical, dental, and long-term care expenses.
- You must not be eligible for coverage through an employer: You cannot claim the deduction if you are eligible for health insurance coverage through your spouse’s employer or any other employer.
- You must not be eligible for Medicare: You cannot claim the deduction if you are eligible for Medicare.
If you meet these criteria, you can claim the Self-Employed Health Insurance Deduction on your tax return. The deduction allows you to deduct the cost of your health insurance premiums, up to certain limits, as an adjustment to your income. It’s important to note that the deduction only applies to your self-employment income and not to any other income you may have.
Health Insurance Premiums
Health insurance premiums are important to any individual or family’s financial planning. Premiums are the amount of money that you pay each month to your health insurance provider in order to have coverage for medical expenses. It is important to understand how health insurance premiums work and what factors can affect them so that you can make the best decisions when it comes to your health care.
Premiums are usually paid on a monthly basis and can vary depending on the type of coverage, the age and health of the insured person, and other factors. Some people choose to pay a higher month-to-month cost and have a lower deductible to meet. Others choose to pay lower monthly premiums and then have higher deductibles they need to meet.
When it comes to figuring out your self-employed health insurance deduction, it can seem like such an intimidating task, but it doesn’t have to! Be sure to consult with a tax expert when you make any decisions. They will help ensure you are getting the most money back!
It can seem complicated when it comes to health insurance premiums and knowing which is your best option, but at 180 Healthcare, our team of experts takes the time to listen and understand your needs.
Choosing Health Coverage
While we aren’t tax experts or accountants, we are professionals who love to help individuals find the right health coverage. At 180 Healthcare, we are not a traditional insurance company, but we are a health and wellness company that is here to help you find the best possible solutions for your family’s healthcare needs. Our goal is to keep you happy and healthy!
We offer subscription-based healthcare coverage for those who are looking for alternative ways to make sure they are insured. We work with individuals and businesses to meet their healthcare needs. Our clients love to work with us because we keep both you and your wallets happy because each experiences lower healthcare costs with 180 Healthcare!
We have partnered with area health experts like doctors’ offices, dental offices, chiropractors, fitness facilities, laboratory services, and so much more! We take all of these healthcare businesses, bundle them together for you, and provide them at a low monthly price.
If you are self-employed and are wondering how the self-employed health insurance deduction is relevant to you, we would love to talk. Our experts are here to help you understand your options. Call us at 573-803-4661 or contact our team today.