Tax Year Prior to 2020: Can I deduct my healthcare premiums if I’m partly self employed?

[McCool]

I have a part time W2 job (no benefits included) for which I work about 19 hours a week. I also tutor privately. In 2019 I received healthcare premium credits after signing up for a policy through healthcare.gov. 

Would I be able to deduct my healthcare premiums since I am partly self employed?

[WKins2]

If you pay for your health insurance premiums with after tax dollars, meaning they do not get taken from your pay check, then yes, you could file them under the self-employed health insurance on your return. 

[McCool]

Thanks, can you clarify for the following situation:

My 1095 lists 3 columns: A. Monthly enrollment premium; B. Monthly second lowest cost silver plan (SLCSP) premium, and C. Monthly advance payment of premium tax credit.

Since, I received an advance premium tax credit, I am assuming I would only be able to deduct the difference between what I actually paid and the advance premium. For example, If I received $4000 for the year in advance premium, but I paid $5000 in actual premium payments, then I would be able to deduct $1000 as a self employed business expense? Also I would get this by subtracting the column total for C from the column total for A? Assuming column B is just there for reference? 

The premium were not deducted from my paycheck. They we post tax dollars paid out of pocket. Thanks

[ColeenD3]

In order to deduct your Self Employed Health Insurance, you must qualify to do so.

• You were self-employed and had a net profit for the year reported on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040).
• You were a partner with net earnings from self-employment for the year reported on Schedule K-1 (Form 1065), box 14, code A.
• You used one of the optional methods to figure your net earnings from self-employment on Schedule SE.
• You received wages in 2019 from an S corporation in which you were a more-than-2% shareholder. Health insurance premiums paid or reimbursed by the S corporation are shown as wages on Form W-2.

The insurance plan must be established, or considered to be established as discussed in the following bullets, under your business.

• For self-employed individuals filing a Schedule C, C-EZ, or F, a policy can be either in the name of the business or in the name of the individual.
• For partners, a policy can be either in the name of the partnership or in the name of the partner. You can either pay the premiums yourself or the partnership can pay them and report the premium amounts on Schedule K-1 (Form 1065) as guaranteed payments to be included in your gross income. However, if the policy is in your name and you pay the premiums yourself, the partnership must reimburse you and report the premium amounts on Schedule K-1 (Form 1065) as guaranteed payments to be included in your gross income. Otherwise, the insurance plan won’t be considered to be established under your business.
• For more-than-2% shareholders, a policy can be either in the name of the S corporation or in the name of the shareholder. You can either pay the premiums yourself or the S corporation can pay them and report the premium amounts on Form W-2 as wages to be included in your gross income. However, if the policy is in your name and you pay the premiums yourself, the S corporation must reimburse you and report the premium amounts on Form W-2 in box 1 as wages to be included in your gross income. Otherwise, the insurance plan won’t be considered to be established under your business.

[McCool]

Yes, I was "self-employed and had a net profit for the year reported on Schedule C"

Now what about calculating the amount I am able to deduct based on my 1095-A as outlines in my prior question. Thanks

[ColeenD3]

You are correct in your assumption. You can only deduct what you actually paid. You do not need to make any calculations. Follow the steps below.

Marketplace

Enter the health insurance premium information from your 1095-A on the 1095-A screen in TurboTax.  This is information will be used in Form 8962 to determine any adjustment needed in the premium tax credit your received. Form 8962 Line 26 will show the resulting over/under tax credit and be transferred to your 1040.

[McCool]

Thanks, one last related question. If, after inputting that info, Turbotax tells me that I received too much of an advance premium based on my actual income and that I owe $300 in reconciliation. Will that amount be automatically taken off my refund or would I need to send in the $300 separately?

[MarilynG1]

It will automatically be deducted from your Refund.

You could lower or eliminate the amount of PTC you have to repay by contributing to an IRA.

Click the link for more details on the PTC. 

[McCool]

How about subtracting other healthcare expenses outside of premiums - just say I purchase some OTC meds from Walmart - would I be able to count these as healthcare/self employed expenses?

[BillM223]

OTC items are never deductible as medical expenses. 

The IRS says "You can include in medical expenses amounts you pay for prescribed medicines and drugs. A prescribed drug is one that requires a prescription by a doctor for its use by an individual."

See IRS Pub 502.

Legitimate medical expenses are still entered on Schedule A for the self-employed.