W2 without benefits, healthcare premium deduction

[Stumpedbytaxes]

I work per-diem for a company which issues me a W2.  They do not offer any benefits or healthcare insurance so I pay for it out-of-pocket with post-tax dollars off the exchange as I do not qualify for any subsidy. I have no outside income aside from a rental house. Thus I am essentially “Self employed” but do not have a business. Can I still deduct health-insurance premium and healthcare expenses similar to if I had 1099 income (which I do not).  If so, what seciton of turbo-tax would I do this in (wages & income or deductions and credits).

[DoninGA]

Health care insurance premiums and other medical expenses that you paid with out of pocket funds are an eligible medical expense that you can deduct using Schedule A for itemized deductions. However, only your total medical expenses that are greater than 7.5% of your Adjusted Gross Income (AGI) can be deducted. Your total itemized deductions reported on Form 1040 Schedule A must be greater than the standard deduction for your filing status to have any tax benefit.

Standard deductions for 2019

• Single - $12,200 add $1,650 if age 65 or older
• Married Filing Separately - $12,200 add $1,300 if age 65 or older
• Married Filing Jointly - $24,400 add $1,300 for each spouse age 65 or older
• Head of Household - $18,350 add $1,650 if age 65 or older

To enter your medical expenses -

• Click on Federal Taxes (Personal using Home and Business)
• Click on Deductions and Credits
• Click on I'll choose what I work on (if shown)
• Scroll down to Medical
• On Medical Expenses, click the start or update button

Or enter medical expenses, sch a in the Search box located in the upper right of the program screen. Click on Jump to medical expenses, sch a

[Stumpedbytaxes]

Thank-you for the quick response.  That I understand, thus my followup question specifically is in regard to the 7.5% or by some references 10% AGI threshold.  My understanding is that self-employed individuals (1099, S-corp, etc) can deduct the full amount and do not have to exceed that threshold to deduct healthcare premiums/expenses.  I do receive a W2 but also received a 1095-C with 1H designation indicating I wasn't offered benefits. My medical expenses do not exceed 7.5% of my income, but in my situation, am I prohibited from deducting like a "self employed" individual.

[DoninGA]

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@Stumpedbytaxes wrote:

Thank-you for the quick response.  That I understand, thus my followup question specifically is in regard to the 7.5% or by some references 10% AGI threshold.  My understanding is that self-employed individuals (1099, S-corp, etc) can deduct the full amount and do not have to exceed that threshold to deduct healthcare premiums/expenses.  I do receive a W2 but also received a 1095-C with 1H designation indicating I wasn't offered benefits. My medical expenses do not exceed 7.5% of my income, but in my situation, am I prohibited from deducting like a "self employed" individual.

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Self employed individuals can only report the amount of health care Insurance premiums they pay and then only if they have net income at least as much as the premiums paid.  The premiums paid are an Adjustment to Income.  It is not a direct expense on the Schedule C.  Any actual medical expenses, other than the health insurance premiums, still must be entered on Schedule A even if self employed.

A Form 1095-C is not entered on a tax return.

For tax year 2019 your total medical expenses that are greater than 7.5% of your Adjusted Gross Income (AGI) can be deducted.  The tax code was changed in December 2019 to reduce the 2019 AGI for medical expenses from 10% of AGI to 7.5% of AGI.

[Stumpedbytaxes]

Understood. Given my situation of W2, non-benefitted income, am I able to deduct the premiums as an adjustment to my income (my net income exceeds this amount). Cheers and sorry for my naivete.

[DoninGA · Accepted solution]

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@Stumpedbytaxes wrote:

Understood. Given my situation of W2, non-benefitted income, am I able to deduct the premiums as an adjustment to my income (my net income exceeds this amount). Cheers and sorry for my naivete.

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No.  As an employee who receives a W-2, your health care insurance premiums can only be entered as an itemized deduction on Schedule A.

[kevinpal]

ok. So  the total premiums do not need to be greater than 7.5% of your Adjusted Gross Income (AGI) to itemized on schedule A, The 7.5% threshold is just for medical expenses(exclude premiums) to itemize, Correct?

Thanks.

[MarilynG1]

@kevinpal The Insurance Premiums don't have to be greater than 7.5% of your AGI, but you will only be able to deduct the total of Medical Expenses that are GREATER than 7.5% of your Adjusted Gross Income (which includes the insurance premiums). 

When you enter your Medical Expenses, TurboTax will calculate any deductible amount for you on Schedule A.

For example, you have Insurance Premiums of $1,000, Rx co-pays of $500, Doctor and Dentist Bills of $500, your total Medical Expenses are $2,000.

If your AGI is $20,000, for instance, you would be able to deduct $500 of the total of $2,000 (7.5% of $20,000 is $1,500) as Medical Expenses on Schedule A. 

If your Insurance Premiums are your only Medical Expense, and they are less than 7.5% of your AGI, you wouldn't be able to deduct any of this amount. 

Click this link for more info on Medical Expenses.