![]() ![]() The above the line deduction includes the premiums you pay for health coverage for yourself, your dependents, and your spouse, if applicable, for the types of plans listed under “Health Insurance Premiums” above. For purposes of the income limitation, the shareholder’s wages from the S corporation are treated as his or her earned income. This above the line deduction is also available to more-than-2% S corporation shareholders. In addition, for the insurance to be treated as subsidized, 50% or more of the premium must be paid by the employer. That is, as long as he or she isn’t eligible for employer-subsidized long-term care insurance. Thus, an individual who is eligible for employer-subsidized health insurance may still deduct long-term care insurance premiums. This rule is separately applied to plans that provide coverage for long-term care services. No above the line deduction is permitted when the self-employed individual is eligible to participate in a “subsidized” health plan maintained by an employer, the taxpayer’s spouse, any dependent, or any child of the taxpayer who hasn’t attained age 27 as of the end of the tax year. Does The Above the Line Deduction Apply to Me? In turn, you may deduct the cost of the premiums as an above-the-line deduction under the rules discussed in this article. If you are a partner who performs services in that capacity and the partnership pays health insurance premiums on your behalf, those premiums are treated as guaranteed payments that are deductible by the partnership and and be included in your gross income. This above the line deduction is limited to your net profits from self-employment. Self-employed? You may be able to deduct 100% (no 7.5%-of-AGI reduction) of the cost of medical insurance without itemizing your deductions. Please call us if you have questions related to expenses that you think might qualify as a medical expense.
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