Tax Tip: How to Deduct Health Insurance

✅ Sole proprietors can reduce their taxable income by deducting the cost of health insurance as a personal tax deduction. However, this deduction does not reduce the income subject to Social Security and Medicare taxes.

✅ Partnerships – health insurance expenses for partners are deducted similarly to those of sole proprietors: by reducing income on the partner’s individual tax return.

✅ S corporations – owners include the cost of insurance in their W-2 wages, pay federal income tax on it, but not Social Security and Medicare taxes. This allows them to claim a deduction similar to self-employed individuals.

📝 The insurance must be in the owner’s name and paid from business income for the deduction to be valid. Coverage may also include the owner's family members.

📩 Reach out if you need help with structuring payments or correctly claiming deductions — we’ll be happy to help!