How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask PDtax Your Own Question
PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 3961
Experience:  35 years tax experience, including four years at a Big 4 firm.
Type Your Tax Question Here...
PDtax is online now
A new question is answered every 9 seconds

I own a small business in California and my wife and I are

This answer was rated:

I own a small business in California and my wife and I are a group of 2 and have group health insurance with Kaiser Permanente. I was able to take a pretty substantial self employed health insurance deduction in 2012 which lowered our AGI significantly. I am wondering if I will lose that deduction and if I should add that amount back to my AGI to get a better feel for what my eligibility will be as I shop for individual ACA health insurance. It looks as if I will be able to save roughly $1000/month if I switch to an ACA individual plan.

Will I lose the self employed health insurance deduction completely or will I still be able to claim my health care costs in future years as a straight deduction?

PDtax :

Welcome to the site. I'm PDtax, and will be helping you today.

PDtax :

I just got called away. I'll be back in an hour and a half.



Customer: replied 3 years ago.


Hi Colin,

I'm working on the response in Q & A format.
Customer: replied 3 years ago.

OK. I'm here now for 10 minutes or so then will be gone for about 20 minutes

Hi Colin,

You are scheduled to lose that deduction for 2013. You may want to investigate incorporating your business to create an entity that can deduct the costs for 2013.

If you do not change the entity form of your business, you will base the Federal subsidy, if eligible, on your 2013 income. Using your 2012 income and adding back the self employed health insurance deduction is a good start for estimating your 2013 income.

The deduction is not currently available, although legislation was just introduced to renew the deduction for 2013. Otherwise, you will be limited to an itemized deduction that must exceed 10% of adjusted gross income to get a tax deduction.

Thanks for asking at Just Answer. I'm PDtax.
Customer: replied 3 years ago.

Is the loss of the deduction related to ACA or for some other reason?

The deduction expired after 2012, and was allowed to under ACA, which was signed into law in 2010. The non-renewal was intended to level the playing field, as Federal tax credits for health insurance based on income are now in play for both small businesses and individuals.
Customer: replied 3 years ago.
Relist: Incomplete answer.
I'm having trouble independently verifying what he told me and I emailed him through the site for clarification and never got a response back.
Hi again. PDtax. I never got your email.

What questions do you have?
Customer: replied 3 years ago.

I did some independent checking on the IRS website and don't see where the deduction is going away for 2013. Can you give me a citation?


I do see where the deduction is only valid for expenses that exceed 10% vs 7.5% before.


Here are some numbers for us for 2012:


AGI - $58788

Health expense - $18503


Expected health expense with ACA ~$12000.


Assuming the deduction hasn't gone away completely like you said earlier, since we will still exceed 10%, would we still be able to deduct the full amount or is it the amount above 10%?



IRC 162 (l) is the code section governing this deduction.

I knew I had seen a bill in congress asking for this deduction to be made permanent. is the link I found to the bill.

From the bill text:


(a) In General.--Paragraph (4) of section 162(l) is amended by
striking ``, or after December 31, 2010''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2012."

Expert again...My reading of this leads me to believe the deduction did expire (it was renewed annually in 2011 and 2012).

Assuming the deduction did expire for periods after 12/31/12, it is the amount above 10%.

Thanks for holding my feet to the fire. There is a dearth of information about this topic, so I am glad that digging did indeed answer the question.

Positive feedback closes out your question. I'm PDtax. is the cite for the text of the bill.
Customer: replied 2 years ago.

The bill you are citing refers to a different calculation in self-employment tax I believe. It looks like this bill currently has 0% chance of passing but it isn't really what I was wondering about.


I found this in TurboTax online for 2013. What happens in 2014 - when ACA kicks in - is another question:

You're right. I remembered seeing news of the bill asking that the deduction be made permanent, and made the leap to assume that the deduction was not available for 2013. I saw reference to that same thing early on in looking at this for you, but both were incorrect.

The deduction is available for 2013. The bill does not prove or disprove the expiration of the deduction. The existence of ACA tax credits does not preclude the deduction.

The deduction remains for 2013. It should. health care costs are too high as it is, and not allowing self employed people the same tax deduction as employees is unfair.

Yes, in 2010 there was a self employment deduction change with health insurance.

So, recap,...

The SE health insurance deduction is available for 2013 under IRC 162 (l) and has not been repealed.

You will not lose that deduction, but keep in mind the health insurance Federal tax credit offset will be based on 2013 income.

2013, more so than in many years, will have incentives to keep income low. Tax planning to maintain your income level at or below prior year levels will be paramount to avoid unpleasant tax credit concerns.

Thanks again from Just Answer.
PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 3961
Experience: 35 years tax experience, including four years at a Big 4 firm.
PDtax and other Tax Specialists are ready to help you

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Previous | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA

Meet The Experts:

  • Wallstreet Esq.

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    10 years experience
< Last | Next >
  • Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    10 years experience
  • Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • Richard's Avatar


    Tax Attorney

    Satisfied Customers:

    29 years of experience as a tax, real estate, and business attorney.
  • Robin D.'s Avatar

    Robin D.

    Senior Tax Advisor 4

    Satisfied Customers:

    15years with H & R Block. Divisional leader, Instructor
  • Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
  • jgordosea's Avatar


    Enrolled Agent

    Satisfied Customers:

    I've prepared all types of taxes since 1987.
  • R. Klein, EA's Avatar

    R. Klein, EA

    Enrolled Agent

    Satisfied Customers:

    Over 20 Years experience