You can usually deduct short-term health insurance premiums as a medical expense. Short-term health insurance premiums are paid out of pocket with pre-tax money, so if you take the itemized deduction and your total annual medical expenses exceed 7.5% of your AGI, you can claim the deduction. If you itemize your deductions for a tax year on Schedule A (Form 1040), ITEMIZED Deductions, you may be able to deduct the expenses you paid that year for medical and dental care for you, your spouse and your dependents. You can only deduct the total amount of your medical expenses that exceeds 7.5% of your adjusted gross income.
Calculate the amount you can deduct on Schedule A (Form 1040). Most self-employed taxpayers can deduct health insurance premiums, including age premiums for long-term care coverage. Cancellations are available regardless of whether you itemize or not, if you meet the requirements. You can deduct premiums for supplemental health insurance policies, such as Medigap, or dental insurance from your taxes.
By Michael Bihari, MD Michael Bihari, MD, is a pediatrician, health educator and board-certified medical writer, and president emeritus of the Cape Cod Community Health Center. This contrasts with the two scenarios described above, the self-employment health insurance premium deduction and the health savings account deduction, which can be used regardless of whether the deductions are itemized. If you're buying your own health insurance, keep in mind that you need to sign up for a plan through your state's health insurance exchange in order to apply for premium tax credits (in advance or on your tax return). You can only request the cancellation of health insurance premiums during months when neither you nor your spouse were eligible to participate in an employer-subsidized health plan.
However, if you buy your own health insurance, you may be able to deduct the cost when you file your tax return. These may include costs related to seeing a doctor, wearing glasses, transportation to essential health care services, and the premiums you pay for health care. This is the number you arrive at after you have made certain deductions in excess of what is set out in Schedule 1 of your Form 1040 tax return, reducing your gross income to your taxable income. You can include a long list of health-related expenses in your total medical expenses, including prescription drugs and optional surgical procedures, such as laser eye surgery to correct vision.
Chances are, your health insurance comes from your employer and is already being paid for with pre-tax money. If you're self-employed, the health insurance premiums you pay to cover yourself and your dependents are probably tax-deductible, as long as you get your own health insurance and are not eligible to participate in a health plan subsidized by your spouse's employer (or your own employer, if you have another job besides self-employment). Health insurance premiums are tax-deductible, but only for those who spent more than 7.5% of their income on health care expenses. However, keep in mind that with the new standard deduction amounts, you're now much less likely to end up itemizing your deductions, including medical expenses.
Chris Peterson, tax manager at CB Smith & Associates, said that most people apply for the standard deduction instead of itemizing health care deductions because they don't exceed the standard deduction level. If you're self-employed, you may be eligible to deduct the premiums you pay for qualifying health, dental and long-term care insurance coverage for you, your spouse, and your dependents. Or, as described in the next section, as part of your general medical expenses if you itemize your deductions and your medical expenses are high enough to qualify for the deduction. .