California Life-Only & Accident and Health AgentAccident and Health InsuranceHard
A self-employed individual has a qualified health plan. What percentage of the premiums paid for this health insurance can typically be deducted as an adjustment to gross income for federal income tax purposes?
- A100%
- B80%
- C75%
- D50%
Show answer & explanationAnswer & explanation
Correct answer: A. 100%
Self-employed individuals can deduct 100% of the health insurance premiums paid for themselves, their spouse, and dependents, as an adjustment to gross income, provided they are not eligible to participate in an employer-sponsored health plan.
Why the other options are wrong
- B. Incorrect; 80% is not the standard deduction for self-employed health insurance premiums.
- C. Incorrect; 75% is not the standard deduction for self-employed health insurance premiums.
- D. Incorrect; 50% is not the standard deduction for self-employed health insurance premiums.
Self-Employed Health Insurance Deduction
A federal tax deduction that allows self-employed individuals to deduct 100% of the health insurance premiums they pay for themselves, their spouse, and dependents, as an adjustment to gross income, if they are not eligible for other employer-sponsored health coverage.
- 100% of premiums are deductible.
- Applies to self, spouse, and dependents.
- Must not be eligible for employer-sponsored health plan.
Memory trick: Employer pays, Employee pays, Self-Employed gets 100.