Health insurance premiums are one of the most common expenses people have. And because health care is a vital part of our lives, it’s not surprising that many people struggle to pay these premiums on their own. In this article, we will explore the different ways you can write off health insurance premiums on your taxes. From claiming them as a personal expense to deducting them as a business expense, there is a way for you to take advantage of this tax break.
Can You Write Off Health Insurance Premiums On Your Taxes?
Health insurance premiums are considered taxable income, just like any other form of income. However, there are certain situations in which you may be able to write off your health insurance premiums on your taxes.
If you’re self-employed and pay for health insurance yourself, you may be able to deduct the premiums as a business expense.
If you’re covered by a employer-sponsored plan, the company may be able to give you a tax deduction for the premiums. Be sure to ask your accountant or tax preparer about this possibility.
Finally, if you qualify for a Health Savings Account (HSA), you can contribute up to $3,500 per year towards your premiums. This money will grow tax-free until used to pay for qualified health expenses.
The Health Insurance Premium Tax Credit
The health insurance premium tax credit is a government-provided subsidy that can reduce your taxes owed. This credit is available to individuals who purchase coverage through an exchange established by the Affordable Care Act (ACA). To claim the credit, you must submit Form 8962, Health Insurance Premium Tax Credit. In general, the amount of the credit you can claim depends on your income and filing status.
If you are married filing jointly, you may be able to claim a maximumCredit of $3,000 per spouse. If you are married filing separately, you may be able to claim a maximum Credit of $1,500 per spouse. If you files as head of household, you may be able to claim a maximum Credit of $6,000 per qualifying person in your household. qualifying person means your spouse or any other person who could be claimed as a dependent on your federal tax return based on the rules in effect at the time of your enrollment in coverage through an Exchange established by the ACA.
To qualify for this credit, you must have purchased health insurance through an Exchange during 2017 and have paid at least one premiums tax since January 1st of that year.
The Short-Term Health Insurance Tax Credit
The Short-Term Health Insurance Tax Credit is a tax deduction that may be available to you if you are covered by short-term health insurance. The tax credit is worth up to $2,500 for individuals and $5,000 for families. You may be able to take the credit if you paid your premiums by cash, check, or electronic funds transfer during the taxable year. To be eligible for the credit, your coverage must have been in effect for less than 63 days during the taxable year.
If you are covered by short-term health insurance and meet these requirements, you can claim the credit on your taxes. However, there are some limitations to the credit. First, the credit is only available if your coverage costs less than 8% of your household income. Secondly, you can only claim the credit if you file a Schedule C with your tax return. Finally, the credit is not available for coverage purchased after October 1, 2007.
If you are eligible for the credit and choose to take it, remember that it will reduce your taxable income by the amount of the credit.
The Long-Term Care Insurance Tax Credit
If you are covered by a health insurance policy that has premiums paid by your employer, you may be able to write off the premiums on your taxes. You can deduct the premiums you paid in 2017, 2018, and 2019. The deduction is only available to you if your income is below certain limits. If your income is above those limits, you cannot deduct the premiums.
The amount of the premium deduction you are eligible for depends on your income and whether or not you qualify for the Premium Tax Credit. To qualify for the credit, your Adjusted Gross Income (AGI) must be below 50% of the Federal Poverty Level (FPL). Your FPL is based on your family size and number of children. If you do not have any dependents, your FPL is $24,000 for single people and $48,000 for married couples filing jointly.
If you have one dependent child or more but your AGI does not exceed $48,000, your FPL is $12,160. If you have two or more dependents but your AGI does not exceed $64,000, your FPL is $16,240. If your AGI exceeds these amounts but does not exceed 100% of the Federal Poverty Level ($100,000), you are considered to be within the coverage gap and therefore are eligible for a premium tax credit even if it exceeds 10% of your premium.
Conclusion
In the United States, taxpayers are allowed to write off a certain amount of their health insurance premiums as medical expenses. This is known as the Cost Reimbursement Plan (CRP). If you are self-employed and pay your own health insurance premiums, you can also claim these expenses on your taxes. Keep in mind that there are some limits on how much you can claim and that you must provide proof of purchase to substantiate your claims. So if you’re thinking about making a big tax deduction for your health insurance premium this year, consult with an accountant or tax specialist first.
