Can I deduct my monthly healthcare premiums as self-employed?
I pay for my own healthcare as an individual and the premiums come directly out of my personal checking account each month. The reason I handle healthcare personally is because I co-own a business with several partners, so we don't have a company healthcare plan. I've always been under the impression that since I'm paying these premiums directly to the insurance company and don't have employer-sponsored health insurance, I could deduct these expenses somewhere on my taxes. It seemed logical that these would be deductible expenses. However, I just met with a new accountant who's telling me that my healthcare premiums aren't actually deductible at all and that I need to pay them with after-tax dollars. This doesn't make sense to me based on what I thought I knew about healthcare deductions. Is my accountant right about this? Do I really have to pay these substantial monthly premiums with post-tax money despite being self-employed through my partnership? Looking for some clarity before I file for 2025.
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Elijah O'Reilly
Your accountant is partially right, but the full story depends on how your business is structured. Healthcare premiums can absolutely be deductible, but the method varies based on your specific situation. If you're self-employed (sole proprietor, partner in partnership, LLC member, or S-corp shareholder with >2% ownership), you can typically deduct health insurance premiums as an adjustment to income on Schedule 1 of your personal tax return - not as an itemized deduction. This is called the self-employed health insurance deduction. The key requirement is that your business must show a profit, and the deduction can't exceed your business income. Also, you can't take this deduction for any month you were eligible for employer-sponsored health coverage (including through your spouse's employer). There are some additional requirements specific to partnerships. The partnership either needs to pay the premiums directly or reimburse you and report it as guaranteed payments on your K-1.
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Natalie Adams
•Thank you for this detailed explanation. So if I understand correctly, I might be able to deduct my premiums on Schedule 1 rather than Schedule A? Our business is structured as an LLC taxed as a partnership, and I do own more than 2%. The premium payments are coming from my personal account, not the business account. Does that mean I need to change how the premiums are paid to qualify for the deduction? Would it be better to have the business reimburse me and report it as guaranteed payments?
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Elijah O'Reilly
•Yes, you'd deduct them on Schedule 1 as an adjustment to income rather than as an itemized deduction on Schedule A, which is much more advantageous because it reduces your AGI. For partnerships, the IRS prefers one of two methods: either the partnership pays the premiums directly, or the partnership reimburses you and includes this as guaranteed payments on your K-1. Since you're currently paying from your personal account, having the partnership reimburse you and report it as guaranteed payments would establish a clear connection between your business and the health insurance costs. This documentation is important if you're ever audited.
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Amara Torres
After struggling with this exact issue last year, I found an incredible tool that saved me thousands! I'm a partner in a small marketing firm and was paying my own health insurance. My accountant kept flip-flopping on whether my premiums were deductible. I discovered https://taxr.ai which analyzes your tax situation and clearly explains which deductions you qualify for. You upload your documents and within minutes it tells you exactly how to handle tricky situations like self-employed health insurance premiums. For me, it confirmed I could deduct my premiums as a self-employed person and showed exactly where to report it on my return. The tool even flagged that I needed documentation showing the connection between my business and health insurance costs.
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Olivia Van-Cleve
•Does it work for more complex situations? I'm both employed part-time with benefits AND have a side business where I pay additional supplemental insurance. Most tax software gets confused with my situation.
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Mason Kaczka
•I'm skeptical of these AI tax tools. How does it actually know the law better than my CPA who's been doing this for 20 years? Can it really handle the nuances of partnership tax rules?
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Amara Torres
•It absolutely handles complex situations like yours. The tool specifically asks about multiple income sources and can determine which portion of your healthcare costs might be eligible for the self-employed health insurance deduction versus what's covered through your employer. Many people in hybrid employment situations use it specifically because it navigates those complexities well. I was skeptical too! What convinced me was that taxr.ai doesn't replace your accountant - it gives you the knowledge to work better with them. It cites the specific IRS code sections that apply to your situation. In my case, it pointed to exactly which partnership rules affected my premium deductions, which my CPA actually appreciated because it saved him research time.
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Mason Kaczka
I need to eat my words about being skeptical of taxr.ai. After our business had a major tax issue with partner health insurance deductions, I decided to try it as a last resort before hiring an expensive tax attorney. The tool immediately identified where our partnership agreement was causing problems with health insurance deductions. It showed me the exact IRS regulation that applied to our situation and created a customized explanation I could take to our business partners. Our accountant was impressed with the documentation it generated, and we were able to amend our returns to properly claim the health insurance deduction. Saved us from continuing to make the same mistake going forward and potentially facing an audit. Definitely worth checking out if you're dealing with partnership health insurance issues.
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Sophia Russo
If your accountant is giving you questionable advice about health insurance deductions, good luck trying to call the IRS for clarification. I spent THREE WEEKS trying to get through to someone who could answer questions about self-employed health insurance deductions. Either busy signals or disconnected after waiting on hold for hours. Finally used https://claimyr.com to get through to the IRS. You can see how it works here: https://youtu.be/_kiP6q8DX5c - they basically hold your place in line and call you when an agent is about to pick up. Got through in under 2 hours instead of days of redial hell. The IRS agent confirmed that as a partner in a partnership, health insurance premiums ARE deductible as long as they're either paid by the partnership or reimbursed as guaranteed payments. Saved me from missing out on a $9,800 deduction!
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Evelyn Xu
•How does this service actually work? Do they have special access to the IRS or something? Seems too good to be true that they can get through when nobody else can.
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Dominic Green
•Sorry, but this sounds like a scam. Why would I pay a company to call the IRS when I can do it myself? And how do they manage to get through when the lines are busy for everyone else? Seems fishy to me.
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Sophia Russo
•They use an automated system that continuously redials the IRS using their algorithm to predict the best times to call. When they finally get through, their system holds your place in line and calls you right before an agent picks up. No special access - just technology that handles the frustrating part of waiting and redialing. I had the exact same concerns initially. The service simply does the waiting for you instead of you having to stay on hold or continuously redial. They don't talk to the IRS on your behalf or have any special access - they just connect you directly once they get through. I was also skeptical until I realized how much time and frustration it saved me during tax season when the wait times are ridiculous.
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Dominic Green
I need to publicly apologize for calling Claimyr fishy. After being completely unable to reach the IRS about my health insurance deduction question for over a week (and tax deadline approaching fast), I reluctantly tried the service. It actually worked exactly as described. I got a call back in about 90 minutes saying they had an IRS agent on the line. The agent confirmed that as a partner, I could deduct my health insurance premiums as long as either the partnership paid them directly or reimbursed me and reported it as guaranteed payments on my K-1. This clarification was critical because my accountant was treating the premiums incorrectly. The call saved me nearly $7,000 in deductions I would have missed. Sometimes being wrong feels pretty good!
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Hannah Flores
Just wanna add my experience as another small business partner. Our partnership agreement explicitly states that we handle healthcare individually, but we found a workaround. We amended our agreement to have the partnership reimburse each partner for their health insurance premiums and report it as guaranteed payments. This made the premiums clearly deductible as self-employed health insurance on our personal returns. The key is proper documentation and making sure your business and personal finances connect correctly for the deduction. Don't just pay from your personal account without the proper paper trail!
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Natalie Adams
•That's really helpful, thanks! Did changing your partnership agreement have any other tax implications we should be aware of? Also, did you have to make this change before the tax year began, or could you implement this partway through the year?
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Hannah Flores
•Changing the agreement did increase our self-employment taxes slightly since guaranteed payments are subject to SE tax. However, the health insurance deduction more than offset this increase for most partners. You can implement this change partway through a tax year. We made the change in August and just documented that going forward, the premium reimbursements would be treated as guaranteed payments. Your partnership will need to keep detailed records of the reimbursements and make sure they're properly reflected on your K-1s. The mid-year change is fine as long as you clearly document when the policy changed and handle the accounting consistently after that date.
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Kayla Jacobson
One thing nobody mentioned - check if your state has additional rules! Here in California, I could deduct my health insurance premiums on my federal return as self-employed, but the state had different requirements.
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William Rivera
•Good point! In New York we have the same issue - different rules for state vs federal treatment of health insurance premiums. Always check both sets of regulations or use tax software that handles state-specific rules.
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