How it works
The self-employed health insurance deduction is an "above-the-line" deduction, meaning you get it whether or not you itemize. It reduces your adjusted gross income (AGI) directly, which can also lower your eligibility for other tax benefits that phase out at higher income levels.
You can deduct premiums for:
- Medical insurance
- Dental insurance
- Vision insurance
- Long-term care insurance (with age-based limits)
Who qualifies?
You qualify if:
- You have net self-employment income (sole proprietor, partner, LLC member, or S-corp shareholder with >2% ownership)
- You're not eligible for an employer-sponsored health plan through your own job or your spouse's job
- The insurance plan is established under your business
The deduction can't exceed your net self-employment income. If your business lost money, you can't claim this deduction for that year.
You're a freelance designer with $80,000 in net self-employment income. Your family health insurance costs $18,000/year.
You deduct the full $18,000 on Form 1040, Schedule 1, Line 17. This reduces your AGI to $62,000 before any other deductions.
See IRS Publication 535 (Business Expenses), Chapter 6. Report on Form 1040, Schedule 1, Line 17 (Self-employed health insurance deduction).
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