Can I Deduct Health Insurance Premiums if I Don't Itemize?
The Internal Revenue Service allows you to deduct health insurance premiums if your medical expenses for the year exceed 7.5 percent of your adjusted gross income, but you can only take this deduction if you itemize your deductions. However, if you are self-employed, you can deduct health insurance premiums without itemizing.
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Medical and Dental Expenses
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Qualifying medical expenses must relate to the diagnosis, treatment, cure or prevention of diseases or medical conditions. You may also include the cost of health insurance premiums, but you can't include any portion that your employer paid. You also can't include premiums you paid with pretax wages.
Self-Employed Health Insurance Deduction
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If you are self-employed and you don't have access to a health insurance policy from any other source, you can deduct up to 100 percent of the cost of your health insurance premiums from your taxable income. To claim this deduction, your business must have shown a net profit for the year, and your self-employed health insurance deduction can't exceed your business's net profit.
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Reporting Deductions
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To include your health insurance premiums in the standard medical expenses deduction, you must include it on lines 1 through 4 of Schedule A, which is the form for itemized deductions. If you include any itemized deductions from Schedule A, you must itemize all deductions on your return. However, if you are claiming the self-employed health insurance deduction, you must include it on Line 29 of Form 1040. Since you must complete Form 1040 whether or not you itemize, you don't have to itemize to claim the self-employed health insurance deduction.
Considerations
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If you qualify for the self-employed health insurance deduction and the medical expenses deduction, you can take both. However, you can't include the cost of your premiums in the medical expenses deduction, and you must itemize your deductions. If you qualify for the self-employed health insurance deduction, you may also be able to deduct premiums you paid to cover a spouse who worked for you or to cover your children under age 27.
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References
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