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Ask Lane Your Own Question
Category: Tax
Satisfied Customers: 12683
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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If an independent contractor l(paid with 1099s) allowed to

Customer Question

If an independent contractor l(paid with 1099s) allowed to deduct his cost of health insurance on fed tax returns?
Submitted: 2 years ago.
Category: Tax
Expert:  Lane replied 2 years ago.
One of the better Tax incentives out there.
From here:
"If you are self-employed, the IRS wants you to know about a tax deduction generally available to people who are self-employed.
The deduction is for medical, dental or long-term care insurance premiums that self-employed people often pay for themselves, their spouse and their dependents.
The insurance can also cover your child who was under age 27 at the end of 2012, even if the child was not your dependent."
Let me know if you need help with this or have other questions...
Expert:  Tax.appeal.168 replied 2 years ago.
Welcome. Thank you for choosing us to assist you. My name is ***** ***** my goal is to help make your life, a little... less taxing.
While the answer by the first responding person lets you know that you can deduct the insurance on your federal return, vital information, such as, what line to deduct the insurance on was not provided. That would be Line 29 of the Form 1040. What good is having information if you don't know how to apply it?
Let me know if I can be of further assistance to you regarding this matter.
Customer: replied 2 years ago.
Thank you very much. This info is for my son and is most helpful to him as he need to get health insurance. Many Thanks for swift reply!
Expert:  Tax.appeal.168 replied 2 years ago.
You are very welcome. Have a great evening.
Expert:  Lane replied 2 years ago.
As your question is about eligibility, (can he TAKE the deduction) I thought of a couple of things that MIGHT affect, or limit, that:
(1) Eligibility is determined month-by-month
He can only claim the health insurance premiums write-off for months when neither he nor his spouse (if any) were eligible to participate in any employer-subsidized (group) health plan.
For example, lets say he's single and left his employer to BE an independent contractor in June, then he can only deduct the premiums he paid for the last six months of the year.
(2) There's an earned income limitation
The deduction can't be more than the profit he makes from his business.
For example, if his self-employment is a sole proprietorship, and he had a tax loss for the year, then he's not allowed to claim the deduction because his contractor didn't generate any positive earned income.
Sorry for the data-dump, but again, since your question was whether or he could take the deduction, I wanted to cover all the bases and list the two things that might still get in the way.
Let me know if you have ANY questions at all...
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