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If you are self-employed, you may be eligible to deduct premiums that you pay for medical, dental and qualifying long-term care insurance coverage for yourself, your spouse and your dependents.
Keep in mind that this deduction treatment also means you can’t deduct the premiums when you calculate your self-employment tax liability.
You can only claim the health insurance premiums write-off for months when neither you nor your spouse were eligible to participate in an employer-subsidized health plan.
For example, if you were single and ineligible for any employer-provided health plan during the last six months of the year because you left your job and started your own business, you can claim the deduction for premiums you paid for coverage during that six-month period.
The deduction cannot exceed the earned income you collect from your business.
For example, if your self-employment activity is a sole proprietorship that generated a tax loss for the year, you’re not allowed to claim the deduction because the business didn't generate any positive earned income.
Partners and LLC members who are treated as partners for tax purposes are considered to be self-employed.
If your business has employees and you pay health insurance premiums for them, these amounts are deducted on the applicable tax form and line for employee benefit program expenses.
For example, if your business is a sole proprietorship, you deduct premiums paid to provide health coverage to employees on line 14 of Schedule C.
THE BOTTOM LINE
If you qualify, the deduction for self-employed health insurance premiums is a valuable tax break. With the rising cost of health insurance, a tax deduction can help you pay at least a portion of the premium cost. And that will help to keep you healthy, and happy.
Written by TurboTax Staff