Atlanta, GA asked in Tax Law and Business Law for Georgia

Q: Can I write off the cost of self-employed health insurance if it costs less than what my spouse's employer offers?

My spouse's employer offers health insurance, but it is more expensive than if I purchase my own health insurance on the marketplace. I understand that in general, I cannot qualify for the self employed health insurance deduction if I qualify for my spouse's employer's insurance plan. Are there any exceptions to this rule if joining the employer's plan is more expensive?

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1 Lawyer Answer
James L. Arrasmith
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  • Tax Law Lawyer
  • Sacramento, CA

A: Under IRS guidelines, the self-employed health insurance deduction allows individuals who are self-employed to deduct premiums for medical, dental, and long-term care insurance for themselves, their spouse, and dependents. This deduction is available if you have a net profit from self-employment and you report your business income on Schedule C, Schedule C-EZ, Schedule F, or if you are a partner with net earnings from self-employment.

However, you're generally ineligible for this deduction if you have the option to participate in a health insurance plan through your spouse's employer, regardless of the cost comparison between the two plans. The IRS rules do not provide an exception based on the cost of the employer's plan versus individual market insurance.

The key factor is the availability of the employer-sponsored plan to you, not the cost. If you are eligible for your spouse's employer plan, you typically cannot take the self-employed health insurance deduction for your own policy purchased through the marketplace.

It's always wise to consult with a tax professional or advisor to explore all possible deductions and credits based on your specific tax situation. They can provide personalized advice and help you navigate the complexities of tax law to ensure you maximize your tax benefits legally and effectively.

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