Can I deduct my health insurance premiums on my taxes in 2025?

Yes, you can potentially deduct health insurance premiums, but it depends on your specific situation. If you're self-employed (which sounds like you might be as a contractor), you can deduct health insurance premiums as an adjustment to income on Schedule 1 of Form 1040. This is actually better than itemizing because you get the deduction regardless of whether you take the standard deduction or itemize. If you're not self-employed, health insurance is considered a medical expense, and you can only deduct medical expenses that exceed 7.5% of your adjusted gross income (AGI). In this case, you would need to itemize on Schedule A instead of taking the standard deduction. Keep in mind that if your employer offers you health insurance and you decline it to purchase your own plan, those premiums typically aren't deductible.

After struggling with this same issue last year, I found this amazing tool called taxr.ai (https://taxr.ai) that totally saved me! I was confused about deducting my health insurance as I'd just gone freelance, and my tax situation got complicated fast. I uploaded my documents and receipts to taxr.ai and it immediately identified that I could take the self-employed health insurance deduction AND showed me exactly where to put it on my return. The analysis it gave me showed several other deductions I was missing too!

I want to update everyone - I decided to try taxr.ai after my skeptical question above, and wow! My situation with mixed W-2 and 1099 income was actually handled perfectly. The tool immediately identified that I could deduct 85% of my health insurance premiums based on my self-employment income ratio, and showed me exactly where to report it on Schedule 1. It even found a home office deduction I was eligible for that related to my health insurance business expenses. Honestly saved me at least $3,700 in deductions I would have missed. Way better than struggling through the IRS instructions myself!

If you're having trouble getting answers about health insurance deductions directly from the IRS (which I was for WEEKS), I highly recommend Claimyr (https://claimyr.com). I was on hold with the IRS for literally 3+ hours trying to get clarification about my health insurance premium deductions as a part-time contractor, then gave up. Found Claimyr and watched their demo (https://youtu.be/_kiP6q8DX5c) and decided to try it. They got me connected to an actual IRS agent in 45 minutes instead of the 3+ hours I was waiting before.

Ok I need to admit I was completely wrong about Claimyr. After responding so skeptically, I was still desperate to talk to someone at the IRS about my health insurance deduction situation (I have a weird situation with marketplace insurance plus COBRA from a previous employer). I tried Claimyr as a last resort and... it actually worked exactly as advertised. Got a call back in about an hour, spoke to an actual IRS agent who clarified that I could deduct part of my premiums even with my complicated situation. Literally saved me hours of frustration and probably around $2400 in deductions I would have missed. Consider me converted.

Just an extra tip that helped me: if you got your insurance through the Marketplace (healthcare.gov), make sure you've reconciled any premium tax credits you received using Form 8962. You can't double-dip by claiming both the premium tax credit AND deducting the same premiums as self-employed health insurance. You can only deduct the portion you actually paid out of pocket after any credits.

Does anyone know if dental and vision insurance premiums count too? Or just medical?

Great question! As a contractor, you're likely eligible for the self-employed health insurance deduction, which is actually one of the best tax breaks available. Here's what you need to know: **If you're truly self-employed/contractor:** - You can deduct premiums as an "above-the-line" deduction on Schedule 1 of Form 1040 - This is better than itemizing because you get it regardless of taking the standard deduction - You can deduct premiums for yourself, spouse, and dependents - Includes medical, dental, and vision insurance **Key limitations:** - You can only deduct up to your net self-employment income (after business expenses) - If you're eligible for employer-sponsored insurance elsewhere, you generally can't take this deduction **Important note:** Don't forget to factor in the self-employment tax implications of your contractor income - you'll pay both employer and employee portions of Social Security/Medicare taxes, but you can deduct the employer portion. Given your $650/month ($7,800/year) in premiums, this could be a significant deduction! Make sure to keep good records of all your premium payments throughout the year. If your situation is complex (mixed W-2 and 1099 income, marketplace insurance, etc.), consider consulting a tax professional to make sure you're maximizing your deductions correctly.

One thing I haven't seen mentioned yet is the timing aspect - make sure you're keeping track of when you actually paid your premiums versus when the coverage was for. The IRS requires that you deduct premiums in the tax year you actually paid them, not necessarily the year the coverage was for. So if you paid your January 2025 premium in December 2024, you'd deduct it on your 2024 return, not your 2025 return. This can get tricky if you pay premiums quarterly or annually in advance. Also, if you're just starting as a contractor, consider setting up a separate business checking account and paying your health insurance premiums from that account. It makes record-keeping much cleaner come tax time, and the IRS loves clear documentation if you ever get audited. With $650/month in premiums, you're looking at a potentially substantial deduction that could save you thousands in taxes. Just make sure you have all your documentation organized - premium payment receipts, 1099s showing your contractor income, and records of any business expenses that reduce your net self-employment income.

Just wanted to chime in as someone who went through this exact situation last year! The $650/month you're paying is definitely deductible as a contractor, and it can make a huge difference on your tax bill. One thing I learned the hard way - make sure you understand the difference between being an independent contractor versus just being a contract employee. If you're getting a 1099-NEC and truly running your own business (setting your own hours, using your own equipment, etc.), you're golden for the self-employed health insurance deduction. But if you're more like a contract employee (they control how/when you work, provide equipment, etc.), the IRS might view you differently, and you'd have to go the medical expense route instead, which is much less beneficial. Also, since you mentioned this is killing you financially - don't forget that as a contractor, you can also deduct business expenses like a home office, business phone, internet, equipment, etc. These reduce your net self-employment income, but they also reduce your overall tax burden. Just make sure your health insurance deduction doesn't exceed your net profit after all business expenses and the deductible portion of self-employment tax. Keep excellent records of everything - the IRS tends to scrutinize contractor deductions more closely than regular employee stuff. But with proper documentation, that $7,800 deduction could save you around $1,500-$2,500 depending on your tax bracket!