What Are the Tax Benefits of Health Insurance?

Health insurance is costly, especially if someone loses work or does not have coverage through the company. A number of tax incentives can assist you in paying your premiums, except you must understand the laws and employ several critical tactics to maximize your benefits.

You normally have to pay monthly premiums for your health insurance, whether it's via your work or you are covered by Medicare. However, you may have tax deductible premiums, and you may be eligible for other tax breaks that may help you save costs and extend your budget for health-care. Here's how to find out if you qualify for these tax breaks.

Premiums for the Self-Employed Are Tax-Deductible

If you have self-employment income and no eligibility of participating in a health plan your health insurance premiums may be tax deductible. You don't need to list to qualify; the deduction is taken on Schedule 1 of Form 1040. According to Jina Etienne, a certified public accountant in Silver Spring, Maryland, and member of the American Institute of CPAs' Financial Literacy Commission, the deduction is restricted to the net profit mentioned on Schedule C.

If you had health insurance sponsored by your employer for the initial months of the year and then lost your job and began freelance work, you can deduct premium part you paid for the months you weren't entitled for coverage sponsored by employer.

Medical Expenses Itemized Deduction

If you itemize your deductions, health insurance premiums can be deducted from your taxes. Medical expenditures can only be deducted if they surpass 7.5% of your accustomed gross income.

You can't double dip and claim your premiums as tax-deductible if you obtain health insurance via your job and pay your premiums with pretax money. However, there are rare instances where people pay after-tax premiums for employer-sponsored coverage and are unaware that they may be deductible. Some retirees may be missing out on a lawful deduction if they neglect to declare that they pay for medical insurance using their pension, which is paid after taxes. See us at Oklahoma Health Options for insurance plans for family and individual.