How do I calculate my self-employed health insurance deduction?


Editorial team Published on

Calculate your self-employed health insurance deduction using IRS Form 7206 by taking the lesser of your total qualified premiums paid or your net self-employment earnings.

💡 Eligibility & Rules

  • Net Profit: Must show a net profit from your business (Schedule C, Schedule F, or K-1).
  • No Other Coverage: Cannot be eligible for an employer-subsidized health plan through your own or a spouse's job.
  • Cap Limit: Deduction cannot exceed your net profit from the specific business under which the plan was established.

📊 Calculation Steps

  • Tally Premiums: Add total out-of-pocket medical, dental, and qualified long-term care insurance paid for yourself, spouse, and dependents.
  • Check Net Income: Find your net earnings from the business minus half of your self-employment tax and retirement contributions.
  • Apply Lesser Value: Choose the smaller amount between total premiums paid and your adjusted net earnings limit.
  • Report Above-the-Line: Enter the final calculated figure on Schedule 1 (Form 1040), line 17.