I’ve been looking into tax deductions and wondering if my health insurance premiums could be deductible. I know some people can, but IDK how it all works with income limits and stuff. Anyone have experience with this?
If you’re self-employed, you can deduct health insurance premiums directly from your income, as long as you made a profit. It doesn’t have to go over that 7.5% income threshold, which is pretty helpful
@Lian
Yep, I’m self-employed, and it’s one of the few perks come tax season. I think it only counts if you itemize your deductions otherwise
Bell said:
@Lian
Yep, I’m self-employed, and it’s one of the few perks come tax season. I think it only counts if you itemize your deductions otherwise
Oh, that’s good to know. Itemizing always sounds so complicated, though. Does it end up saving you more than the standard deduction?
@Yan
Depends on your expenses. If you had a lot of medical bills, then yeah, it might be worth it. But for most people, the standard deduction usually wins
If you’re not self-employed, you can only deduct the portion that’s more than 7.5% of your AGI. So, for example, if your AGI is $100k and your medical costs are $9,500, you can only deduct $2k
Palmer said:
If you’re not self-employed, you can only deduct the portion that’s more than 7.5% of your AGI. So, for example, if your AGI is $100k and your medical costs are $9,500, you can only deduct $2k
That’s pretty steep. Not many people spend that much on medical stuff unless it’s a rough year
@Pax
Exactly… most people end up just taking the standard deduction. Itemizing medical expenses is only worth it if you’ve had major costs, like surgery or long-term care
What about long-term care insurance? I heard there’s a deduction for that, but I’m not sure how it works
Freddie said:
What about long-term care insurance? I heard there’s a deduction for that, but I’m not sure how it works
You’re right, you can deduct long-term care insurance, but only if you itemize and if the total goes over that same 7.5% threshold. And the IRS has limits based on your age for how much you can deduct
@Bran
Oh, so if you’re older, you can deduct more? Makes sense, I guess, since long-term care is expensive
Also, keep in mind that if your premiums are paid pre-tax through your employer, you can’t deduct them. The tax savings are already built in
Weston said:
Also, keep in mind that if your premiums are paid pre-tax through your employer, you can’t deduct them. The tax savings are already built in
Right, like with HSAs and FSAs too. They’re pre-tax, so there’s no extra deduction
@Riley
Good point. Those accounts are useful, but no double-dipping allowed, I guess
If you buy insurance through the marketplace, you might qualify for a premium tax credit. But any part of your premium covered by that credit isn’t deductible
Peyton said:
If you buy insurance through the marketplace, you might qualify for a premium tax credit. But any part of your premium covered by that credit isn’t deductible
That’s true. And you only have to file a tax return every two years now to keep your federal subsidies if you qualify
@Cambria
Really? That’s actually helpful if you’re in between jobs or something