Can I deduct health insurance premiums with both Schedule C and W-2 income?

You're actually in a good position here! As a self-employed person with a profitable Schedule C business, you CAN deduct your health insurance premiums as an adjustment to income (above-the-line deduction) on Schedule 1 of your Form 1040. This is called the self-employed health insurance deduction. The key is that you can deduct premiums up to the amount of your net profit from self-employment. Since you mentioned your Schedule C business generates the majority of your income and is profitable, you'll likely be able to deduct most or all of your premiums. The best part is that this deduction is completely separate from your standard deduction. You can take BOTH the self-employed health insurance deduction AND the standard deduction. You don't need to itemize to get this benefit. Just make sure you're not eligible for coverage through your W-2 employer or your spouse's plan, as that would make you ineligible for the deduction in months when you could have had that coverage.

I was in a similar situation last year and found this amazing tax tool that really helped me figure out my self-employed health insurance deduction. It's called taxr.ai (https://taxr.ai) and it specifically asked me about my W-2 job and Schedule C business to determine exactly how much of my health insurance I could deduct. What I liked was that it analyzed all my income sources and actually showed me how to document everything correctly so I wouldn't raise any red flags with the IRS. Since most of your income is from self-employment like mine was, it'll probably confirm you can deduct virtually all your premiums above-the-line.

Just wanted to update everyone. I was skeptical about taxr.ai but decided to try it anyway since my situation with W-2 and Schedule C income was confusing me. Wow - it actually identified that I was eligible for the full self-employed health insurance deduction despite my W-2 job! The tool showed me exactly where to report the deduction on my tax forms and explained that because my employer doesn't offer insurance, I'm eligible to deduct premiums up to my net Schedule C profit. It even pointed out that I needed to adjust my self-employment tax calculation to account for the deduction, which is something I would have missed completely. Definitely saved me a lot of money on my taxes this year!

For anyone dealing with complex tax situations like this, I had a related issue with the IRS last year where they questioned my self-employed health insurance deduction. I tried calling the IRS for weeks but couldn't get through to confirm how to handle my mixed W-2/Schedule C situation. I finally used Claimyr (https://claimyr.com) and they got me connected to an actual IRS agent in under 45 minutes. There's a video showing how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent confirmed that I was filing correctly and explained exactly how to document everything so it wouldn't get flagged again. Saved me so much stress trying to call them directly!

I have to eat my words about Claimyr. After posting my skeptical comment, I was still struggling to get answers about my self-employed health insurance deduction situation. In desperation, I tried the service. I honestly expected nothing to happen, but about 35 minutes after signing up, I got a call connecting me to an actual IRS representative. They confirmed that with my Schedule C income exceeding my W-2 income, I could deduct 100% of my health insurance premiums as an above-the-line deduction, and still take the standard deduction. The agent even caught that I had been calculating it wrong in previous years and explained how I could file amended returns. Can't believe I wasted days trying to call them directly!

Just a heads up - make sure you're not deducting the same premiums twice! If you're taking the self-employed health insurance deduction on Schedule 1, you cannot also include those same premiums as itemized medical expenses on Schedule A (even if you were itemizing). Also remember that the premiums have to be established under your business or under you as the business owner.

I messed this up last year and got a letter from the IRS. Make sure the health insurance plan is actually in YOUR name or your business name. My wife had purchased our family plan under her name only (even though she's not self-employed), and I tried to take the self-employed health insurance deduction. The IRS disallowed it and I had to pay back taxes plus a small penalty.

This is such a helpful thread! I'm in a similar boat with W-2 income from my day job and Schedule C income from freelance consulting. One thing I learned the hard way is to keep really detailed records of your health insurance payments throughout the year. The IRS wants to see that you actually paid the premiums (not just that you were supposed to pay them), so keep all your bank statements, credit card statements, or cancelled checks showing the monthly payments. Also, if you have any gaps in coverage during the year, you can only deduct premiums for the months you were actually covered. Since you mentioned your Schedule C business is profitable and generates most of your income, you should be in great shape to take the full deduction. Just make sure you don't deduct more than your net self-employment income - that's the cap on how much you can claim.