Comments for Self Employed Health Insurance Deduction

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Apr 19, 2011
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Self Employed Health Insurance
by: Stephanie

Hi Mark,

This is a great question that is confusing for many, thank you for asking.

According to the IRS Pub 17 for use in preparing 2010 tax returns:

"If you were self-employed and had a net profit for the year, you may be able to deduct, as an adjustment to income, amounts paid for medical insurance on behalf of yourself, your spouce, and dependents. The insurance plan must be established under your trade or business and the deduction cannot be more than your earned income from that trade or business.

You cannot deduct payments for medical insurance for any month in which you were eligible to participate in a health plan subsidized by your employer."

My understanding of the reason for this is because when insurance premiums are deducted from a paycheck they are usually deducted pretax which means you are already getting a tax benefit, so you cannot deduct it again on your taxes as this would be a duplicate benefit.


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