Getting deductions on taxes is not a difficult task if you understand the terms and conditions of the deduction that you are claiming. This will save you from paying penalties later. Health insurance can be expensive and many ask the question, “are life insurance premiums tax deductible”? If you are one among the people looking for the answer to the question, are life insurance premiums tax deductible, read on to understand about the same. The tips and tricks shared below will help you to understand more on the things to be done to deduct health insurance premiums.
- Check the form W2 from your employer and see if the income withheld from your salary to pay the portion of insurance premiums to an employer sponsored health care plan is included in the figure that is in the Box 1, “Wages, tips and other compensation”. If it is excluded from that figure, you may not deduct the money that you contribute to the premiums. It falls in the taxable income range. If you are a part of a group insurance plan, you can deduct the money that you spent after taxes. If you are self-employed, and pay for your health insurance, the premiums may be deducted.
- Ensure that you deduct only that money that went to services like medical care, eye care and dental care. There are some rules that apply to long-term insurance plans that require you to subtract a certain amount of money based on your age. You will not be able to deduct anything based on this until you are forty years old. The medical expenses should be more that 7.5 percent of the adjusted gross income for you to deduct. Nothing below this is deductible.
- The list of medical expenses that you can deduct is given in the IRS web site in publication 502. This list will give an idea on what you can deduct and what you cannot.
- Write down each deduction on the itemized form. Make sure that you have the receipts of the charge, which can be produced as the evidence of the charge.
- You will not be eligible to deduct any plan that is paid for with pretax dollars. If you do so, you could end up being reprimanded by the Internal Revenue Service.
These are the instructions to be followed to deduct health insurance premiums. If you have any further doubts, you can seek the advice of a tax advisor.