Are Health Insurance Premiums Tax Deductible?February 01, 2017
When April comes, we all know what’s right around the corner — tax season. Most of us start thinking about the list of items that can possibly qualify as deductions. Business expenses, charitable gifts, and in some cases, health care premiums.
According to the IRS, "If you itemize your deductions for a taxable year on Form 1040, Schedule A, Itemized Deductions, you may be able to deduct expenses you paid that year for medical and dental care for yourself, your spouse, and your dependents." Here's the scoop on what you can and cannot deduct regarding medical insurance premiums come tax time.
- Health Care Premiums May Be Deducted If:
- Your total qualified expenses, including eligible health care premiums, exceed 10 percent of your adjusted gross income.
- You paid for your health care premiums with your own after-tax money.
- You are self-employed and responsible for your own health care coverage.
- Your Medicare premiums (including Part B, C, and D) exceed 7.5 percent of your income.
- Health Care Premiums Cannot Be Deducted If:
- Your total qualified medical expenses don't exceed the applicable percent-of-AGI threshold.
- Your employer or the government paid for the premium.
- Your employer provides health care and deducts your share of the premium from your paycheck pre-tax.
If you purchase your own health plan, you can write off 100 percent of the cost of the premium, even if you don't itemize your deductions. The deduction - which you will find on Form 1040 - allows self-employed individuals to reduce their adjusted gross income by the amount they pay in health care premiums during a given year, according to healthinsurance.org.
You may need to work with an accountant to figure out what you can deduct. To get more answers about health care premiums and tax deductions you can use this online tool to determine what your can deduct or contact the IRS for free tax help.