Should my insurance premiums be allocated to a deduction or the premium tax credit?
If you are self-employed and eligible for both the Self-Employed Health Insurance Deduction (or an itemized deduction for your self-employed insurance premiums) and the Premium Tax Credit for the same premiums, you must divide the premiums between the deduction and the credit. The IRS does not allow you to claim the same amount for both.
Below is one way to split your premiums, so you don't count them twice. This method is optional. The IRS allows other methods if they meet the rules for the deduction or credit. Other methods are described in IRS Publication 974 .
Below is one way to split your premiums, so you don't count them twice. This method is optional. The IRS allows other methods if they meet the rules for the deduction or credit. Other methods are described in IRS Publication 974 .
- Complete your return and enter your premiums both on the Business Income screens as well as the Premium Tax Credit screens.
- Review your federal tax return and locate the amount on Form 8962, Line 24.
- Subtract the amount from Step 2 from the total premiums entered in Step 1.
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Your Self-Employed Health Insurance Deduction is the smaller of:
- The amount from Step 3,
- Form 8962, Line 11a (or the totals of Line 12a through Line 23a) minus Line 25, plus Line 29, or
- Your self-employed earned income from the business where you reported the insurance premiums.
- Enter the amount from Step 4 on the Business Income screens as the health insurance premiums paid. You don't need to change the premiums entered on the Premium Tax Credit screens.
- If your deduction in Step 4 was limited only by your self-employed earned income, then you may claim the remaining premiums as an itemized deduction.
