There are many benefits that come with having self-employed income one of them being a medical insurance deduction. If you have taken on any medical insurance premiums for you or your dependents you can deduct those expenses if you meet the qualifications:
First you must be sure that you fall within the category of people that can deduct these expenses on your taxes. Here are the rules to qualify for the deduction.
You have to be self employed filing as an individual.
If you made a net profit on your schedule C C-EZ or F
If you don’t make a net profit for the year report the premiums paid on your schedule A with other Medical expenses subject to limitations.
Your are a partner who is self employed had net earnings and reported on schedule K-1
You are more than a 2% shareholder in a S corporation. You should receive a W-2 with health insurance premiums paid/reimbursed in your wages.
If you qualify for the deductions next you must determine exactly what you can deduct. Some of the guidelines include:
Medical and dental insurance that you paid for yourself your spouse or any of your dependents who were under 27 by the end of the tax year.
Long term care premiums that you paid. These are subject to some limitations typically based on the age of the insured person.
Some Medicare premiums qualify that you paid for. One exception is that any Medicare premium for the spouse can’t be counted for the self-employed health insurance.
Not all medical insurance expenses qualify for the deduction and there are some limitations to the deductions.
If you could take part in an employer-subsidized plan (including your spouse’s plan) you can’t deduct that amount during the months you were eligible.
If you are a retired public safety officer and your non-taxable health insurance expenses were paid for by retirement plan distributions you can’t deduct those expenses.
If you drew income from self-employment and you took on medical insurance premiums for you and your dependents you could deduct those expenses on your taxes and recoup some of those costs. However remember that these qualifications aren’t just guidelines but tax codes so be sure that you qualify before you deduct the expenses.
With the start of the new year and as you begin to gather information for your taxes using a Louisville CPA is a good idea in order to make sure you are getting all the deductions you’re entitled to. Contact Lindemeyer CPA if you’re looking for a new Louisville tax firm.