Self-Employed Health Insurance Deduction:
You may be able to deduct premiums paid for medical and dental
insurance and qualified long-term care insurance for yourself, your
spouse, and your dependents. The insurance can also cover your child
who was under age 27 at the end of 2011, even if the child was not
your dependent. A child includes your son, daughter, stepchild,
adopted child, or foster child. A foster child is any child placed
with you by an authorized placement agency or by judgment, decree, or
other order of any court of competent jurisdiction.
One of the following statements must be true.
You were self-employed and had a net profit for the year reported on
Schedule C (Form 1040), Profit or Loss From Business; Schedule C-EZ
(Form 1040), Net Profit From Business; or Schedule F (Form 1040),
Profit or Loss From Farming.
You were a partner with net earnings from self-employment for the year
reported on Schedule K-1 (Form 1065), Partner's Share of Income,
Deductions, Credits, etc., 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 2011 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, Wage and Tax
Statement.
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 your 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 will
not 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 your 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 as wages to be included in your gross
income. Otherwise, the insurance plan will not be considered to be
established under your business.
Medicare premiums you voluntarily pay to obtain insurance in your name
that is similar to qualifying private health insurance can be used to
figure the deduction. If you previously filed returns without using
Medicare premiums to figure the deduction, you can file timely amended
returns to refigure the deduction. For more information, see Form
1040X, Amended U.S. Individual Income Tax Return.
Amounts paid for health insurance coverage from retirement plan
distributions that were nontaxable because you are a retired public
safety officer cannot be used to figure the deduction.
Take the deduction on Form 1040, line 29.