My last health insurance company went out of business, but I had a "return of premium" rider, which meant I got half the premiums I paid into the company returned to me. Is that money considered taxable income?
It's only taxable income if you were previously able to deduct it and get a tax benefit it on your tax return.
This is rare, unless you were self-employed and claimed the self-employed healthcare deduction.
For most people, for the premiums to have been deducted on the tax return, you must itemize deductions on Schedule A, and your unreimbursed medical expenses must exceed 10 percent of your adjusted gross income (AGI). Then, you can only deduct the amount by which your unreimbursed medical expenses exceed this 10 percent threshold (7.5% of AGI for age 65 and older until 2017).
I am self-employed and, yes, I have been claiming the self-employed healthcare deduction. Therefore, where on my tax return do I report this "return of premium" money?
It can go in the Other Income area.
- Go to the Personal tab in the Home & Business version
- select Continue or I'll Choose What I Work on (if they show up)
- then, Personal Income
- scroll to Less Common Income
- then, Miscellaneous Income, 1099-A, 1099-C
- at the bottom there will be a selection for Other Reportable Income > select that and continue through the prompts.
You will be able to enter a description and amount. This will not affect your self-employment income, only Ordinary Income. It will show up on line 21 of your Federal Form 1040.
I also received a refund for premiums. However I don't know how much of the premium was refunded from when I was able to claim through self employment and what was after? Do I put the entire amount in and Turbo tax will do the math? I don't want to be taxed twice for the amount I was not able to claim while self employed.
@pgarside You will report your Refund of Premiums as 'Other Income'. You are only being taxed on this income once.
If you were able to deduct all or part of the premiums as a Self Employment Expense previously, you are actually only paying tax on any amount that exceeded your expenses.
This does not affect your Self Employment income/expenses on your 2020 return.
Click this link for more info on Insurance Premium Refunds.