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If you happen to’re a freelancer, you probably pay in your personal medical insurance. And there’s a very good probability you’ve seen the price of your insurance coverage premiums go up dramatically lately.

One technique to offset these higher premiums is to take a deduction for the medical insurance premiums you pay as a self-employed individual. Right here’s what you’ll want to know concerning the tax deduction or self-employed medical insurance.

Can I take the self-employed medical insurance deduction?

If you happen to’re self-employed and plan to report a internet revenue on Schedule C, you could qualify to say the self-employed medical insurance deduction. You might also qualify for the credit score if you happen to meet one of many different necessities.

You possibly can’t declare the deduction for any month you might be eligible to take part in a sponsored plan. It doesn’t matter if that plan is maintained by an employer of you, your partner, or your baby beneath age 27.

What if I’m additionally eligible for sponsored medical insurance for a part of the yr?

You possibly can solely take the deduction for months through which you weren’t eligible for a sponsored employer plan. For instance, if you happen to have been eligible for such a plan for six months of the yr, you’ll be able to solely deduct your self-employed medical insurance premiums for the remaining six months.

Who can my self-employed medical insurance plan cowl?

The plan can cowl you, your partner, and your dependents. It could additionally cowl your youngsters beneath age 27 who might not be your dependents.

Do I’ve to itemize deductions to take this deduction?

You possibly can deduct self-employed medical insurance premiums straight on line 28 of Type 1040. Meaning you’ll be able to benefit from the tax profit even if you happen to don’t itemize deductions.

Does my enterprise have to carry the coverage?

The insurance coverage coverage will be issued within the enterprise’ title or in your title.

Is there a restrict on how a lot I can deduct?

Your self-employment revenue can restrict the deduction. You possibly can’t deduct greater than your internet revenue on Schedule C, diminished by your self-employment tax paid and your contributions to a SEP, SIMPLE, or certified retirement plan for your self.

If you happen to use TaxAct to arrange your taxes, this system does the calculations for you and determines your certified deduction.

In case your deduction is restricted by your internet self-employment revenue, you’ll be able to nonetheless deduct the surplus premiums on Schedule A together with your itemized deductions. Nonetheless, you could not profit from claiming your premiums except your whole medical bills, together with premiums, exceed 7.5 p.c of your adjusted gross revenue

Can I embrace premiums for Medicare or long-term care insurance coverage?

Sure, you need to use each Medicare and long-term care insurance coverage premiums to compute the self-employed medical insurance deduction.