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Self-Employed Health Insurance

Are you eligible for a deduction?

Generally, sole-proprietors may not deduct the cost of health insurance when calculating self-employment tax. However, under the Small Business Jobs Act, self-employed business owners may be able to deduct the cost of health insurance for themselves and their family.

The deduction is not available if the self-employed individual is eligible to participate in an employer-subsidized health plan maintained by the employer of the taxpayer or the employer of the taxpayer’s spouse.

Those who can claim the self-employed health insurance deduction include:

Small businesses and sole-proprietors reporting income on Schedule C;
Farmers reporting income on Schedule F;
General partners in a partnership and actively participating members in an LLC treated as a partnership who have self-employed income; and
Employees of an S Corporation who own 2 percent or more of the S corporation’s stock.

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