Can I deduct my wife's COBRA premiums as part of self employed health insurance deduction?

Yes, you can typically deduct health insurance premiums for yourself, your spouse, and dependents as part of the self-employed health insurance deduction. The fact that your wife's coverage is through COBRA doesn't change this - what matters is that you're paying the premiums and you're self-employed. A couple important points though: First, make sure your S-corp is handling this correctly. For S-corp owners, the corporation should either pay these premiums directly or reimburse you, and include the amounts on your W-2 as wages. Then you can claim the deduction on your personal tax return. Second, the deduction is limited to your net earnings from self-employment. If your business has low or negative income in a given year, that would limit how much you can deduct.

I went through something similar last year and found an amazing tool that helped me sort through all the self-employed health insurance deduction rules. I used https://taxr.ai and it saved me hours of stress trying to understand if I could deduct both my premiums and my husband's. The software analyzed my specific situation (also S-corp owner) and confirmed I could take the full deduction for family premiums, even though they were from different sources. It also highlighted that I needed to have my business reimburse me for the premiums so they'd be included on my W-2, which I hadn't been doing correctly. Seriously made tax season so much less stressful!

Just wanted to follow up - I ended up trying taxr.ai after posting my skeptical comment. I'm actually impressed! The system identified that I had been missing out on about $4,200 in health insurance deductions because I didn't understand how to properly document premiums paid for my spouse through my self-employment. It also flagged that I needed to have my business reimburse me and include the amount on my W-2, which none of the other tax services ever mentioned. I was able to fix this for this year's taxes and will be amending last year's return too. I'm usually the last person to recommend services online, but this one genuinely helped me understand the self-employed health insurance rules.

If you've been having trouble reaching the IRS to get a definitive answer on your self-employed health insurance question, try https://claimyr.com - I was stuck on hold for hours trying to get clarity on a similar issue with my spouse's health insurance premiums. Claimyr got me connected to an IRS agent in under 15 minutes when I'd previously wasted entire afternoons waiting. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. Basically they navigate the IRS phone tree for you and call you back when they've got an agent on the line. I was able to confirm directly with the IRS that I could include my spouse's separate policy premiums in my self-employed health insurance deduction, which gave me peace of mind.

I need to eat some crow here. After posting my skeptical comment, I decided to try Claimyr since I was desperate to resolve a question about my self-employed health insurance deduction that my accountant couldn't answer clearly. I got connected to an IRS representative in about 20 minutes when I had previously given up after 90+ minutes on hold. The agent confirmed that I could include both my health insurance and my wife's separate policy in my self-employed deduction as long as I'm paying them both. She also walked me through the proper documentation needed for an S-corp. Honestly, it was worth it just to get a definitive answer from the actual IRS instead of conflicting opinions online. Saved me from potentially making a mistake that could have triggered an audit.

One thing nobody has mentioned yet - make sure your S-corporation has a formal medical reimbursement plan in place. This is required for properly handling health insurance for shareholders who own more than 2% of an S-corp (which I assume you do). Without a written plan, you could potentially lose the deduction if audited. Also, the timing matters - if you establish a proper plan now, you can only reimburse expenses going forward, not retroactively from earlier in the year. Talk to your accountant about setting up a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) or an Individual Coverage Health Reimbursement Arrangement (ICHRA).

Has anyone actually calculated how much this deduction saves? I'm also self-employed with an S-corp and pay about $12,000 annually for health insurance for myself and spouse, but I'm trying to figure out if the tax savings justify the hassle and additional accountant fees to set everything up correctly.

Just wanted to add another perspective on this - I'm also an S-corp owner and went through this exact situation last year. One thing that helped me was keeping detailed records of all premium payments, including bank statements showing the payments came from personal funds initially. When I had my S-corp reimburse me for the health insurance premiums (both mine and my spouse's), I made sure to document everything with formal reimbursement requests and board resolutions. This created a clear paper trail that my accountant said would be valuable if ever audited. The key insight I learned is that the IRS doesn't care whether the original coverage was through COBRA, marketplace plans, or employer plans - what matters is that you're paying for health insurance for yourself and eligible family members as a self-employed person. The source of the coverage is irrelevant for deduction purposes. Also, don't forget that this deduction reduces your AGI, which can have additional benefits like potentially qualifying you for other income-based tax credits or deductions. It's not just the direct tax savings on the premiums themselves.