Self-employed individuals may be able to deduct the cost of their health insurance premiums—including medical, dental, and qualified long-term care coverage—for themselves, their spouse, and dependents. This deduction is taken above the line on Form 1040, which means you can claim it even if you don’t itemize.
To qualify, the insurance policy must be established under your business, and you must have net self-employment income to support the deduction. The allowable amount cannot exceed your business profit for the year and must be reduced by any months you were eligible for employer-sponsored coverage (from any employer, including a spouse’s).
TaxAct will help compute the deductible portion once you enter your self-employment details and the amount you paid for eligible premiums, following the steps below.
Schedule C Statutory Employee
Enter your information with the steps detailed in the Form W-2 - Statutory Employee FAQ. During the interview process, on the screen Business Income - SE Health Insurance, click Yes, and proceed to enter your information.
Schedule C
Enter your information with the steps detailed in the Schedule C - Entering Sole Proprietorship in Program FAQ. During the interview process, on the screen Would you like to complete the self-employed health insurance deduction worksheet for [business]?, click Yes, and proceed to enter your information.
Schedule F
Enter your information with the steps detailed in the Schedule F - Entering Farm Income in Program FAQ. During the interview process, on the screen Farm Income - SE Health Insurance, click Yes, and proceed to enter your information.
Partnership
Follow the steps in the Schedule K-1 (Form 1065) - Entering in Program FAQ. Enter the amounts as reported in each box on Schedule K-1 that you received. On the Partnership - Self Employed Health Insurance screen, click Yes, and continue with the interview process to enter your information.
S Corporation
Follow the steps in the Schedule K-1 (Form 1120-S) - Entering in Program FAQ. On the S Corporation - Self Employed Health Insurance screen, click Yes, and continue with the interview process to enter your information.