Are you confused about health insurance deductions and premium tax credits? Don’t worry, you’re not alone! With the constantly changing healthcare landscape, it can be tough to keep up with all the ins and outs of insurance.
But fear not – in this blog post, we’ll break down everything you need to know about health insurance deductions and premium tax credits. So grab a cup of coffee (or tea!), settle in, and let’s get started!
What is the Health Insurance Deduction?
When you file your taxes, you may be able to claim a health insurance deduction and premium tax credit. The health insurance deduction lets you subtract the cost of your health insurance from your income. The premium tax credit helps lower your premium costs if you have qualifying health insurance. Both deductions are worth §1000 for singles and couples filing jointly.
The health insurance deduction is available for both individuals and businesses. You can deduct the cost of individual health insurance or family coverage. You cannot deduct the cost of government-provided health care, including Medicare and Medicaid benefits.
You can use the premium tax credit to reduce the amount of your premium bill. The credit is available for people who have qualifying health insurance coverage.
Your qualifying coverage must meet certain requirements, including having a minimum value in excess of the standard contribution amounts for that plan type offered by your employer. If you are covered by a qualified healthcare plan through an employer, you may also be eligible for an employer contribution toward that plan’s premiums.
How much can you deduct?
The health insurance deduction and premium tax credit are two major deductions that you can take on your federal taxes. The health insurance deduction allows you to subtract the cost of your health insurance premiums from your taxable income. Premium tax credits help lower the amount of money that you pay in taxes on your premium costs for individual health insurance, family health insurance, and employer-provided health insurance.
The maximum amount that you can deduct for 2019 is $6,350. This includes both the regular deduction and the additional standard deduction. The total amount that you can Deduct for all of your 2018 expenses is $13,000. If you are age 65 or older, the limit increases to $13,500. There is no limit on the health insurance deduction if you are eligible for Medicare benefits.
Premium tax credits are based on your income level and modified by whether you have children under 18 years old in your household. You can get a premium tax credit of up to 50% of the premium cost for individual coverage or 85% of the premium cost for family coverage. If you qualify for a refundable premium tax credit, the government willpay back part or all of the premiums that were paid with your federal taxes.
What is the Premium Tax Credit?
The Premium Tax Credit is a government-provided tax credit that helps individuals and families afford the cost of health insurance. You can claim the premium tax credit if you have health insurance coverage through an employer, Medicare, Medicaid, or a qualified health plan in the individual market. The amount of your premium tax credit will vary depending on your income and family size.
To be eligible for the premium tax credit, you must have health insurance coverage that meets at least one of the following conditions:
You must be covered by a minimum level of health insurance coverage that provides hospitalization, doctor visits, and other medically necessary services.
Your policy must cover at least 60% of the costs of medical services used to treat an illness or injury.
When do you have to claim the deduction or credit?
If you are an individual, you must claim the health insurance deduction on your federal income tax return. The health insurance deduction is taken as an adjustment to income and is reported as a negative number on Form 1040, line 36. You can claim the health insurance deduction if you were covered by a plan through work or if you were covered by a plan through your individual policy.
If you are married filing jointly, both you and your spouse may be able to claim the health insurance deduction. The health insurance deduction is only available for plans that meet certain requirements, including covering at least 60% of the cost of coverage. To figure the amount of the health insurance deduction, subtract the total premiums paid for coverage during the year from your adjusted gross income (AGI).
You can find out how much premium tax credit you qualify for on Form 8962, Premium Tax Credit Certificate. If you paid more in premiums than you would have if your income had been lower because of a special exclusion for family coverage offered through an employer, you may be able to reduce your taxes by claiming a premium tax credit certificate.
To take advantage of the health insurance premium tax credit, which is available to most taxpayers, file Form 8962 with your tax return. This form includes information about whether you qualify for a premium tax credit and instructions on how to apply it.
Can you use the Health Insurance Deduction and Premium Tax Credit together?
If you are covered by a health insurance plan through your employer, the Health Insurance Deduction and Premium Tax Credit can both help you reduce your taxable income. The Health Insurance Deduction reduces your taxable income by the amount of your premium contributions, up to $2,550 for single individuals and $4,150 for married couples filing jointly in 2018.
The Premium Tax Credit helps you qualify for Medicaid or offset part of your premiums if you have health insurance through an employer. If you do not have coverage through your employer or the government, check if the Health Insurance Marketplace offers subsidies that may be available to help cover your costs.
How do I claim the health insurance deduction or credit?
If you are an American citizen or resident, you may be able to claim the health insurance deduction or premium tax credit. To claim the health insurance deduction, you must pay your health insurance premiums on a regular basis. You can also claim the premium tax credit if your modified adjusted gross income (MAGI) is below certain thresholds. In order to determine if you are eligible for the health insurance deduction or premium tax credit, you will need to complete Form 1040A or 1040EZ and attach supporting documents.
If your MAGI is below 250% of the federal poverty level, you are eligible for a premium tax credit. The percentage of your income that you can use to qualify for the premium tax credit is based on your family size and type of coverage. If your MAGI is below 400% of the federal poverty level, you are also eligible for a health insurance deduction. However, only 50% of your premiums can be used to qualify for this deduction.
To claim either the health insurance deduction or premium tax credit, you must file Form 1040A or 1040EZ by April 15th of the year following the year in which you paid your premiums. You will also need to provide proof of payment such as a receipt from your insurer.
Conclusion
Health insurance deduction and premium tax credit are two important financial benefits that you may be able to take advantage of if you qualify. Health insurance deduction is a way to reduce your taxable income and premium tax credit is a government subsidy that reduces the price you pay for health insurance.
Both of these benefits can help you save money on your taxes and make it easier to afford the health care that you need. For more information, please consult an accountant or other qualified tax advisor.
