BillM223
Expert Alumni

Deductions & credits

The Self-employed health insurance deduction (line 16 on Schedule 1 (1040) is not simply the amount you paid in after-tax dollars for health insurance while self-employed; there is a worksheet in the 1040 Instructions for calculating it - see page 89).

 

What typically catches taxpayers is that the line 16 entry can't be larger than your net profit minus the deductions on line 14 and 15 (the deductible part of the SE tax and the contributions to your Self-Employed SEP, SIMPLE, and Qualified Plans. So increasing your retirement contributions can actually decrease your self-employed health insurance deduction.

 

Complete the worksheet on page 89, and I think you'll see what happened.

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