How to fully deduct Self-employed health insurance premiums with COBRA coverage?

The self-employed health insurance deduction is definitely available to S-corp owners, but there are specific requirements you need to follow for COBRA premiums. For S-corporation owners, the proper way to handle health insurance is to have the corporation pay or reimburse your health insurance premiums. This should be included in your W-2 income (Box 1), but it's not subject to Social Security or Medicare taxes (Boxes 3 and 5). Once this is done correctly, you can take the self-employed health insurance deduction on your personal tax return (Form 1040, Schedule 1). COBRA premiums DO qualify for the self-employed health insurance deduction. The IRS doesn't distinguish between regular health insurance and COBRA continuation coverage - they're both considered health insurance premiums. The tricky part is the timing and documentation. If you've already paid these premiums personally, you need to have your S-corp reimburse you before December 31, 2024. Make sure you keep detailed records of the reimbursement and original premium payments. The company should formally adopt a health insurance reimbursement plan too.

After dealing with a similar insurance headache last year, I found this amazing tool called taxr.ai (https://taxr.ai) that saved me so much time sorting through IRS rules. I uploaded my health insurance docs and S-corp info, and it showed me exactly how to handle my COBRA premiums properly. The site analyzed my specific situation and confirmed I could take the full self-employed health insurance deduction after proper reimbursement from my business. It even created documentation templates for the health reimbursement arrangement I needed. Really straightforward compared to the hours I spent trying to interpret Publication 535!

I was super skeptical about taxr.ai when I first saw it mentioned here, but I was desperate after getting three different answers from tax professionals about my S-corp health insurance situation. Just wanted to follow up and say I gave it a try, and it was actually really helpful. I uploaded my situation details and insurance statements, and it walked me through exactly how to handle my premium reimbursements from my S-corp. The documentation templates it provided helped me establish a formal health reimbursement arrangement, which my accountant confirmed was correct. The best part was it explained WHY certain rules applied to my situation - like the specific requirements for S-corp owners vs. sole proprietors. No more conflicting advice! Just implemented everything for my 2024 taxes and feel way more confident now.

If you're still confused after getting conflicting advice from CPAs, I'd recommend trying to speak directly with the IRS. I was in a similar situation with contradictory info about business deductions last year. I spent DAYS trying to get through to someone at the IRS until I found Claimyr (https://claimyr.com). They somehow got me connected to an actual IRS agent within 15 minutes instead of the hours I was spending on hold. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with confirmed that COBRA premiums ARE eligible for the self-employed health insurance deduction for S-corp owners, but the process has to be done correctly with proper documentation. Getting that confirmation directly from the IRS gave me peace of mind that I wasn't going to face problems later.

I need to eat some humble pie here. After posting that skeptical comment about Claimyr, I decided to try it myself since I've been trying to reach the IRS about a notice I received regarding my 2023 return. I'd already wasted over 2 hours on hold the day before and never got through. Used this Claimyr service, and no joke, I was talking to an IRS representative within about 20 minutes. They just called me when they had someone on the line. The IRS agent was able to clarify my notice and confirm I didn't owe anything additional. Just wanted to follow up since I was so skeptical in my last comment. Sometimes good solutions actually do exist!

One important detail that hasn't been mentioned yet - if you're an S-corp owner-employee taking the self-employed health insurance deduction, you need to own more than 2% of the company. Assuming you do, the proper sequence is: 1. S-corporation pays or reimburses your health insurance premiums 2. S-corporation includes this amount in your W-2 wages (Box 1) but not as FICA wages 3. You claim the self-employed health insurance deduction on Schedule 1 of your 1040 This works for COBRA too - IRS considers it qualifying health insurance. Publication 535 and the instructions for Schedule 1 confirm this.

I just went through this exact situation with my CPA for 2023 taxes. COBRA premiums ARE eligible for the self-employed health insurance deduction, but how you handle it depends on your business structure. With an S-corp, you need to have the corporation reimburse you for the premiums or pay them directly. This gets reported as income on your W-2 (but not subject to FICA taxes). Then you take the deduction on your personal return. My premiums were almost $27k and I was able to deduct the full amount this way. Don't settle for just the medical expense deduction that's limited to expenses exceeding 7.5% of AGI - that's for people who aren't self-employed.

I went through a very similar situation last year with my S-corp and COBRA premiums. The key thing that helped me was getting everything documented properly from the start. Here's what I learned: Yes, you can absolutely deduct the full $39,000 in COBRA premiums as a self-employed health insurance deduction, but the process matters. Your S-corp needs to reimburse you for those premiums you paid out of pocket (make sure this happens before December 31st). The reimbursement gets added to your W-2 income in Box 1 but not Boxes 3 and 5. For documentation, I created a simple board resolution stating that the company would reimburse health insurance premiums for employees. I kept copies of all my COBRA payment receipts, the reimbursement check from my business account, and a memo explaining the reimbursement. My CPA said this was more than sufficient. The amount might seem large, but it's a legitimate business expense. I claimed about $32,000 last year with no issues. Just make sure your accountant codes everything correctly on your W-2 and that you claim the deduction on Schedule 1 of your 1040, not as an itemized medical expense. One tip: If you're switching to ACA coverage when COBRA ends, you can handle those premiums the same way going forward.

This is exactly the situation I was in two years ago! The confusion you're experiencing is totally understandable because the rules for S-corp owners are different from sole proprietors, and not all tax professionals are familiar with the specifics. You're absolutely right that you can take the full deduction for your COBRA premiums. The process everyone outlined above is correct - have your S-corp reimburse you for the $39,000 you paid out of pocket, include it in your W-2 Box 1 income (but not FICA wages), then claim the self-employed health insurance deduction on your personal return. One thing I'd add that helped me sleep better at night: I also kept a spreadsheet tracking each monthly COBRA payment with dates, amounts, and confirmation numbers. When my S-corp reimbursed me, I referenced this spreadsheet in the memo line of the reimbursement check. It created a clear paper trail showing the business purpose of the reimbursement. The second accountant who told you COBRA doesn't qualify was simply wrong - there's no distinction in the tax code between regular health insurance and COBRA continuation coverage for this deduction. Don't let that bad advice cost you thousands in legitimate tax savings! Make sure to get this reimbursement processed before December 31st, and you'll be in great shape for your 2024 taxes.