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You may be able to deduct premiums paid for medical and dental insurance and qualified long-term care insurance for yourself, your spouse, and your dependents. The insurance can also cover your child who was under age 27 at the end of 2018, even if the child was not your dependent. One of the following statements must be true.

  • You were self-employed and had a net profit for the year reported on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040).
  • You were a partner with net earnings from self-employment for the year reported on Schedule K-1 (Form 1065), box 14, code A.
  • You used one of the optional methods to figure your net earnings from self-employment on Schedule SE.
  • You received wages in 2018 from an S corporation in which you were a more-than-2% shareholder. Health insurance premiums paid or reimbursed by the S corporation are shown as wages on Form W-2.

The insurance plan must be established under your business. This is defined below for each type of business owner: 

  • For self-employed individuals filing a Schedule C, C-EZ, or F, a policy can be either in the name of the business or in the name of the individual.
  • For partners, a policy can be either in the name of the partnership or in the name of the partner. You can either pay the premiums yourself or the partnership can pay them and report the premium amounts on Schedule K-1 (Form 1065) as guaranteed payments to be included in your gross income. However, if the policy is in your name and you pay the premiums yourself, the partnership must reimburse you and report the premium amounts on Schedule K-1 (Form 1065) as guaranteed payments to be included in your gross income. Otherwise, the insurance plan won’t be considered to be established under your business.
  • For more-than-2% shareholders, a policy can be either in the name of the S corporation or in the name of the shareholder. You can either pay the premiums yourself or the S corporation can pay them and report the premium amounts on Form W-2 as wages to be included in your gross income. However, if the policy is in your name and you pay the premiums yourself, the S corporation must reimburse you and report the premium amounts on Form W-2 in box 1 as wages to be included in your gross income. Otherwise, the insurance plan won’t be considered to be established under your business.

Please refer to IRS Publication 535 Business Expenses for additional information.

To enter the self-employed health insurance deduction information within your TaxAct® 1040 return (Online or Desktop), use the instructions below that apply to your situation.

Schedule C Statutory Employee

  1. Click Federal. On smaller devices, click in the upper left-hand corner, then choose Federal.
  2. Click Business Income in the Federal Quick Q&A Topics menu to expand the category, then click Income and expense for Statutory Employees
  3. Click Review 
  4. Continue to the screen titled Business Income - SE Health Insurance and click Yes (Note: A number of screens appear before this. To go directly to the health insurance deduction information, click Continue or No until you reach this screen.)
  5. The program will proceed with the interview questions for you to enter the appropriate information

Schedule C

  1. Click Federal. On smaller devices, click in the upper left-hand corner, then choose Federal.
  2. Click Business Income in the Federal Quick Q&A Topics menu to expand the category, then click Business income or loss from a sole proprietorship
  3. Click New Copy of Federal Schedule C (Desktop users click Add) to create a new copy of Schedule C, or click Review to use a copy already created
  4. Continue to the screen titled Business Income - SE Health Insurance and click Yes (Note. A number of screens appear before this. To go directly to the health insurance deduction information, click Continue or No until you reach this screen.)
  5. The program will proceed with the interview questions for you to enter the appropriate information

Schedule F

  1. Click Federal. On smaller devices, click in the upper left-hand corner, then choose Federal.
  2. Click Business Income in the Federal Quick Q&A Topics menu to expand the category, then click Farming income or loss
  3. Click New Copy of Schedule F (Desktop users click Add) to create a new copy of Schedule F, or click Review to use a copy already created
  4. Continue to the screen titled Farm Income - SE Health Insurance and click Yes (Note: A number of screens appear before this. To go directly to the health insurance deduction information, click Continue or No until you reach this screen.)
  5. The program will proceed with the interview questions for you to enter the appropriate information

Partnership

  1. Click Federal. On smaller devices, click in the upper left-hand corner, then choose Federal.
  2. Click Business Income in the Federal Quick Q&A Topics menu to expand the category and then click Partnership income (Form 1065 Schedule K-1)
  3. Click New Copy of Partnership Schedule K-1 (Desktop users click Add) to create a new copy of the form or click Review to review a form already created 
  4. Continue through the interview questions entering the applicable information until you reach the screen titled Partnership - Schedule K-1 Information
  5. Check the box for Box 13-Other deductions, and then click Continue
  6. Continue through the interview questions, and click Yes on the screen titled Partnership - Other Deductions
  7. Click Continue until you reach the screen titled Partnership - Other Deductions - Codes K-O and enter the amount from Box 13, Code M-Amounts paid for medical insurance
  8. Continue to the screen titled Partnership - Self-Employed Health Insurance, and click Yes
  9. The program will proceed with the interview questions for you to enter the appropriate information

S-Corporation

  1. Click Federal. On smaller devices, click in the upper left-hand corner, then choose Federal.
  2. Click Business Income in the Federal Quick Q&A Topics menu to expand the category, then click S-Corporation income (Form 1120S Schedule K-1)
  3. Click New Copy of S Corporation Schedule K-1 (Desktop users click Add) to create a new copy of Schedule K-1, or click Review to use a copy already created
  4. Continue to the screen titled S-Corporation - Self Employed Health Insurance and click Yes (Note. A number of screens appear before this. To go directly to the health insurance deduction information, click Continue or No until you reach this screen.)
  5. The program will proceed with the interview questions for you to enter the appropriate information

S-Corporation (No Schedule K-1 received)

  1. Click Federal. On smaller devices, click in the upper left-hand corner, then choose Federal.
  2. Click Wages and Salaries in the Federal Quick Q&A Topics menu  to expand the category, then click Wage income reported on Form W-2
  3. Click New Copy of Form W-2 (Desktop users click Add) to create a new copy of Form W-2, or click Review to use a copy already created
  4. Click Quick Entry
  5. Scroll to the bottom of the form and make your entries in the section titled More-Than-2% Shareholder Self-Employed Health Insurance Deduction


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