It's tax time again and you may be wondering if your health insurance premiums are tax-deductible. It depends on who you are and who you work for.
Self-Employed: If you are self-employed, the answer often is yes -- the premiums you pay to cover yourself and your dependents probably are tax-deductible. They are not, however, if you, your spouse, or your dependents are covered by another employer's group health insurance plan.
Health Savings Accounts: If you work for a company that offers health insurance as part of what's known as a cafeteria plan, you may have a health savings account (HSA). The contribution you make to your HSA is 100% tax deductible up to a limit of $5950 for family coverage and $3,000 for individual coverage -- for 2009.
If you are not self-employed, and you don't work for a company that provides health insurance with a cafeteria plan, the Internal Revenue Service (IRS) allows you to count health and dental insurance premiums as part of the 7.5% of your adjusted gross income that has to be spent on health care before any out-of-pocket medical expenses can be deducted.
Health and dental insurance premiums can be counted toward that 7.5%. A long list of health-related expenses also can be deducted, including prescription medications and optional surgical procedures, like laser eye surgery to correct vision. The IRS has a list on its website.
Take a look at what the IRS allows you to deduct for health-related items and make sure to keep complete records. And, if you have any questions, speak with a tax advisor.
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