Can You Deduct Health Care Insurance?
The Internal Revenue Service permits the deduction of certain health care insurance costs. The manner in which you can deduct your health insurance depends on whether you are an employee or self-employed.
Employees
You can deduct health insurance costs that you pay as part of the medical expenses deduction, which permits you to deduct the amount by which your total medical expenses for the year exceeds 7.5 percent of your adjusted gross income. You must itemize your deductions to claim this deduction.
Self-Employed Individuals
Self-employed individuals can deduct the cost of their health insurance as an adjustment to income, which means the deduction can be taken without having to itemize deductions. Your deduction cannot exceed your self-employment income.
Types
The IRS permits you to deduct only long-term care insurance premiums and medical insurance premiums. You cannot deduct costs paid for insurance that pays you money to replace lost wages in the event of injury or life insurance premiums. You also cannot deduct insurance costs paid by your employer.
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