Are health insurance premiums tax deductible? People are always searching through their tax forms for new ways to reduce tax burdens. Economic recession saw many people go out of a job, and use their savings to carry on with life. That’s why people never miss a single opportunity to reduce their tax liability. They are always on the lookout for the ways to save money on those taxes. To save money on taxes, you can give money to charity and buy a home for the cause. You can also make use of health insurance premiums as tax deductibles. Health insurance is taxable not in all cases, but in a few.
Self-employed persons can deduct health insurance premiums from taxes. Partnerships and employees who have 2% or more of stock in any corporation are covered by this. The amount is determined by the income you earn in a year. Therefore, if you have loss for a year on your self-employment, then you cannot take deductions. If you qualify for deductions as have been provided, then it is better to get professional help about the calculation of the exact amount that is deductible.
Are health insurance premiums tax deductible if you are on employment with a company and they offer you an insurance plan, which is of the cafeteria plan type? A cafeteria plan type of insurance allows you to choose insurance plans that you need, and that you can afford to pay just like in a cafeteria, for your food items. If your health insurance plan has Health Savings Account (HSA), then your premiums may be made deductibles. For individuals the limit is $3000 and for a family it is $5950. The insurance premiums paid by the employer are based on money before tax, and the employer must have already taken deductions on these. Therefore, by your deductions you should not make the mistake of attracting a tax audit on your head.
Others who do not belong to these two categories, can make a tax deduction of the medical costs. It is necessary that your out-of-pocket expenses be over 7.5% of your adjusted gross income, for you to qualify for this deduction. The health insurance premiums can be taken as deductions, in respect of the medical expenses you have incurred for the year. Work the amount out with the help of a professional, to maximize your deductions.