I am a sole proprietor doing contract work with no access to an employer based health plan. I only worked 9 months out of the year. Can I deduct health insurance costs I paid out of pocket for the entire year? The IRS rules only mention a partial year deduction based solely on whether or not a taxpayer has access to an employer based health plan which I do not have.
Yes. You can write your health insurance costs for the entire year because you do not have access to an employer-based plan. Please read this Turbo Tax article for more details.
Your business income and expenses including your insurance coverage are treated as occurring on a yearly basis.
Yes. You can write your health insurance costs for the entire year because you do not have access to an employer-based plan. Please read this Turbo Tax article for more details.
DaveF1006: Thank you so much for the very fast and helpful reply!
Bsch4477: What you say makes perfect sense, but I don't think this applies to the home office deduction. These are my notes from IRS Publication 587, Business Use of Your Home:
Part-year use. You cannot deduct expenses for the business use of your home incurred during any part of the year you did not use your home for business purposes. For example, if you begin using part of your home for business on July 1, and you meet all the tests from that date until the end of the year, consider only your expenses for the last half of the year in figuring your allowable deduction.
You are correct that the health insurance deduction differs from other business deductions in that the only real requirements are that you be self-employed and that you not have employer coverage available.
Most of the other deductions you have only apply during the period that you are self-employed or need to be pro-rated over that period. The home office deduction definitely fits into that category. You will need to pro-rate all of the home deductions that you have over three quarters of the year.