Can my LLC deduct both my and my spouse's health insurance premiums as a sole proprietor?

You can definitely deduct health insurance premiums as a self-employed person, but there are some specific rules to understand. When you have a single-member LLC that's taxed as a sole proprietorship, you can deduct health insurance premiums for yourself, your spouse, and your dependents on your personal tax return - not as a business expense on your Schedule C, but as an adjustment to income on Schedule 1 of your Form 1040 (the "self-employed health insurance deduction"). The insurance can be in your name personally - it doesn't need to be in the LLC's name. What matters is that your business income is what's paying for the insurance. Both your premium and your spouse's premium can be deducted as long as you're legally married and file taxes together. The one limitation: you can't deduct more than your business's net profit. So if your LLC only makes $10,000 in profit this year, that's your maximum deduction limit.

I was in exactly the same situation last year with my consulting LLC. I found a tool called taxr.ai (https://taxr.ai) that really helped me figure out my self-employed health insurance deduction. I was totally confused about what forms to use and whether I could include my husband's premium. The site analyzed my situation and confirmed I could deduct both our premiums as long as the policy was established under my name or my LLC and my business was showing a profit. It also flagged that I needed to make sure I wasn't eligible for insurance through another employer (including my spouse's employer) - that's a rule that can disqualify you that I didn't know about!

Just wanted to follow up about my experience with taxr.ai from Comment 2. I ended up trying it last weekend when I was stuck on this exact same health insurance deduction issue. I was skeptical but decided to give it a shot. The analysis pointed out that since my LLC is taxed as an S-Corp (different from your situation), I needed to set up a health reimbursement arrangement to make it work properly. This was something my previous accountant never mentioned! The tool saved me from making a mistake that would have cost me about $4,300 in deductions. It also helped me understand how to document everything properly in case of an audit. Definitely worth checking out if you're confused about self-employment deductions.

If you're still struggling to get clear answers about your health insurance deduction situation, you might want to call the IRS directly. But... good luck with that! I spent 3 hours on hold last month trying to ask a similar question. I ended up using Claimyr (https://claimyr.com) which got me connected to an actual IRS agent in about 15 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent confirmed that as a sole proprietor LLC, both your and your spouse's health insurance can be deducted on Schedule 1 (not Schedule C), and explained the exact process. They also sent me a follow-up email with the specific IRS publication that covers this topic. Saved me a ton of confusion and potential audit headaches.

Following up on my skeptical comment above - I actually ended up trying Claimyr when I got completely stuck trying to reach someone at the IRS about my LLC health insurance situation. I have to admit I was wrong. The service connected me to an IRS representative in about 20 minutes versus the 3+ hours I spent the previous week. The agent clarified that I CAN deduct both my and my husband's health insurance premiums through my single-member LLC, but only to the extent of my business profit. She also explained that if I have access to insurance through my spouse's employer (even if I don't take it), I can't take the deduction. That detail alone saved me from a potential audit issue. The call took about 15 minutes and resolved questions I'd been stuck on for weeks.

Small but important detail to add: if your business operates at a loss for the year, you won't be able to take the self-employed health insurance deduction at all. Your deduction is limited to your business profit. Also, make sure you're not eligible for health insurance through another employer or your spouse's job. If you could get insurance elsewhere but choose not to, you can't take the deduction.

Has anyone tried just putting the premiums as a business expense directly on Schedule C? My buddy who has an LLC says that's what his accountant does.

I went through this exact same situation when I started my consulting business last year. The key thing to remember is that as a sole proprietor LLC, you're essentially self-employed for tax purposes, which opens up the self-employed health insurance deduction. Here's what I learned: You can absolutely deduct both your and your spouse's premiums, but it goes on Schedule 1 of your Form 1040 (not Schedule C). The insurance can be in your personal name - doesn't need to be through the LLC. The main requirements are: 1) You're legally married and file jointly, 2) Your business shows a profit (deduction can't exceed your net business income), and 3) Neither of you can be eligible for employer-sponsored insurance elsewhere. That last point caught me off guard - if your spouse's job offers insurance (even if you don't take it), you can't claim this deduction. Definitely worth double-checking that before you make your healthcare decisions. The deduction is really valuable though - it reduces your adjusted gross income, which can lower your overall tax burden significantly. Just make sure to keep good records of all premium payments for tax time!

This is such a helpful thread! I'm in a similar boat - just started freelancing and trying to figure out all the tax stuff. One thing I'm still confused about: when you say the deduction is "limited to your business profit," does that mean your gross revenue or your net profit after all business expenses? For example, if my LLC brings in $50,000 in revenue but I have $20,000 in legitimate business expenses (equipment, software, etc.), would my health insurance deduction be limited to $30,000 or $50,000? Also, does anyone know if there's a difference between buying insurance through the marketplace vs. directly from an insurance company when it comes to this deduction? I've been looking at both options and the marketplace seems more complicated with all the subsidy calculations.

I've been following this thread as someone who went through the same confusion last year! One additional consideration that hasn't been mentioned yet: timing matters for the deduction. You can only deduct premiums for months when you were actually self-employed and had no other health coverage available. So if you started your LLC mid-year or had employer coverage for part of the year, you'll need to prorate the deduction accordingly. Also, a practical tip: set up a separate business bank account if you haven't already, and pay your health insurance premiums from that account. It makes record-keeping much cleaner and provides a clear paper trail showing that your business income is what's funding the insurance. The IRS loves good documentation! One more thing - if you're planning to make estimated quarterly tax payments (which you probably should as a self-employed person), factor in the health insurance deduction when calculating those payments. It can significantly reduce what you owe, so don't overpay your quarterlies.