Q. I’m self-employed and pay for health insurance for myself (and my wife). Can we deduct this cost as a personal medical expense? J.L., Surprise, Ariz.
A. You can probably do that. Specifically, you can probably deduct the full amount of your health insurance premiums on a special line on page 1 of Form 1040 for insurance paid by self-employed individuals (Line 29 for the 2014 version of Form 1040). This deduction is claimed in calculating your adjusted gross income (AGI), which means you don’t have to itemize to benefit. In comparison, the deduction for personal medical expenses, when it is available, is claimed as an itemized deduction on Schedule A. But if you don’t itemize, you get no tax-saving benefit.
Tip: The itemized deduction for medical expenses is generally limited to the excess above 10% of AGI, which is a relatively high threshold. As a result, many taxpayers with relatively significant medical expenses get no tax benefit. But self-employed individuals can usually deduct their health premiums, regardless of how high their income may be.
- Small Business Tax Deduction Strategies No matches