Health insurance premium tax deduction if I'm a W2 with an employer who offers no insurance?

Question

I'm currently self-employed as an LLC (USA) with a sole proprietor tax structure. I have private health insurance and I enjoy the tax deduction for my premiums.

However, I have an opportunity come up where I can take a position as a W2, but this position doesn't offer employer-sponsored health benefits. So, I would still need to keep my private health insurance.

In this situation, can I continue to deduct my health insurance premiums? I would still have my LLC, but after this year I may not have any profits to show for it.

Also, does this situation change if the employer does offer health insurance, but I waive my right to it?

Answer 1

The health insurance deduction is only for self-employment income. You can still deduct health insurance premiums if you are a W-2 employee, but you can't deduct more than your net self-employment income. (See IRS Publication 535 for details of the computation.) So if as you say you had "no profit to show for" the LLC you couldn't deduct anything.

As for your second question, the answer is that if you are eligible to participate in an employer's program, you cannot deduct premiums. The same publication explicitly excludes from deductibility:

amounts for any month you were eligible to participate in a health plan subsidized by your or your spouse’s employer or the employer of either your dependent or your child who was under the age of 27

So basically you can only deduct health insurance premiums up to your net self-employment income, and only if you were not eligible for an employer's program. Merely being a W-2 employee does not prevent you from claiming the deduction, but having no self-employment income does, and so does having access to an employer's program (even if you don't take advantage of it).