Are you tired of paying high health insurance premiums and wondering if there’s any way to get some of that money back? Well, we have good news for you! It may be possible to deduct your health insurance premiums on your taxes.
That’s right – by taking advantage of the tax code, you could potentially save some serious cash when it comes time to file your return. But before you start celebrating, there are a few things you should know. In this post, we’ll explore whether health insurance premiums can really be tax deductible and what steps you need to take in order to make sure you’re eligible for these deductions. So let’s dive in and see how much money we can save!
What is a health insurance premium?
A premium is the amount of money you pay for your health insurance each month. The premium is usually paid to the insurance company, but sometimes it can be paid directly to your doctor or other health care provider.
Can health insurance premiums be tax deductible?
Yes, health insurance premiums can be tax deductible if you are self-employed or if your employer offers a Cafeteria/Section 125 plan. For those who are self-employed, health insurance premiums are considered a business expense and can be deducted on your Schedule C form.
If your employer offers a Cafeteria/Section 125 plan, you may be able to have your health insurance premiums deducted from your paycheck before taxes are taken out. This can lower your taxable income and save you money at tax time.
How to deduct health insurance premiums on your taxes
If you’re self-employed, you can deduct health insurance premiums on your taxes. This includes premiums for both medical and dental insurance. You can also deduct long-term care insurance premiums, as well as any associated costs, such as co-pays and deductibles.
The key is to make sure that you’re only deducting the portion of the premium that you paid yourself; if your employer pays any portion of your premium, you cannot deduct it on your taxes.
If you’re not self-employed, you may still be able to deduct health insurance premiums on your taxes. This includes premiums for both medical and dental insurance. In order to deduct these premiums, you must itemize deductions on your tax return.
Additionally, the total amount of your deduction must exceed the standard deduction for your filing status. For example, in 2020 the standard deduction for a single filer is $12,400; if your total deductions are less than this amount, you cannot claim a deduction for health insurance premiums.
Are there any other tax deductions for health care expenses?
There are a few other potential deductions for health care expenses, but they’re much more limited in scope. For instance, you can only deduct out-of-pocket medical expenses that exceed 7.5% of your adjusted gross income. So if your AGI is $50,000, you could only deduct expenses above $3,750. Additionally, you can only deduct qualified long-term care premiums, and those are subject to strict limits based on your age.
Conclusion
Ultimately, it’s up to you to decide if health insurance premiums are tax deductible and worth the effort. If you believe that a deduction would give you some financial relief, then make sure to research your options thoroughly. Additionally, be sure to consult with an accountant or tax preparer prior to filing in order to get a professional opinion on what deductions might be available for yourself based on your personal situation.
