Most self-employed people can deduct premiums paid for health insurance, dental insurance and long-term care insurance that covers them, their spouse and/or their dependents. Self-employed health insurance tax deductionĪn adjustment to income for health insurance premiums is available if you’re self-employed and buy coverage on your own, regardless of whether or not you itemize. A tax credit gives you a dollar-for-dollar reduction of your final tax burden. If you purchase health insurance through the federal Health Insurance Marketplace® or a state marketplace, you might qualify for a tax credit based on your income and household information. However, if your employer pays part of your health insurance premiums, that portion typically isn’t eligible for a tax deduction. When you itemize your deductions, you typically can claim a deduction for the money you pay out of pocket toward health insurance premiums-including traditional coverage, COBRA and Medicare. Some, but not all, health insurance premiums qualify for tax deductions. On the other hand, you can open an FSA if you obtain health insurance through your employer. You can contribute money to an HSA if you’re enrolled in a high-deductible health plan that only covers preventive services before you reach your deductible. Health insurance premiums usually can’t be paid for with HSA or FSA dollars. HSAs and FSAs let you set aside untaxed money for copays, deductibles and coinsurance as well as prescription and over-the-counter medicine. Both accounts let you set aside money on a pretax basis to cover medical expenses. If you don’t itemize deductions on your federal tax return, you still can score tax benefits by taking advantage of an HSA or FSA. If you file a Form 1040 return, you must itemize deductions using what’s known as Schedule A. A taxpayer can benefit from itemized deductions if they rack up large unreimbursed medical or dental expenses during the tax year. The IRS recommends itemizing if the dollar total of your eligible itemized deductions exceeds the standard deduction or if you can’t take a standard deduction. For single taxpayers and married individuals filing separately, the standard deduction is $13,850. For the 2023 tax year, the standard deduction for married couples who jointly file one return is $27,700. itemized deductionsĪ standard deduction reduces your taxable income by a specific dollar amount. To take advantage of tax deductions for medical expenses, it helps to be familiar with two ways the IRS lets you claim deductions on your federal tax return: standard and itemized deductions. How to claim medical expenses on a tax return
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