Cal11 calculator
Search calculator...

Calculate Self Employment Health Insurance Deduction 2017 Form

Reviewed by Calculator Editorial Team

Calculating your self employment health insurance deduction for 2017 requires understanding the IRS rules and using the correct form. This guide explains how to determine your deduction, what forms to use, and how to maximize your benefits.

How to Calculate Self Employment Health Insurance Deduction

The self employment health insurance deduction allows you to deduct the cost of health insurance premiums you pay for yourself, your spouse, and your dependents from your taxable income. For 2017, the deduction is limited to the amount of your self employment tax.

Formula

Self Employment Health Insurance Deduction = Minimum of:

  1. Total health insurance premiums paid
  2. 2 × Self employment tax paid
  3. 50% of self employment tax paid

To calculate your deduction:

  1. Determine your total health insurance premiums paid during the year
  2. Calculate your self employment tax (25% of your net earnings from self employment)
  3. Apply the formula above to find your deduction amount

Note: The deduction is subject to change each year. Always check the IRS guidelines for the current year's rules.

IRS Rules for 2017 Deduction

The IRS has specific rules for claiming the self employment health insurance deduction in 2017:

  • You must be eligible for the self employment health insurance deduction
  • You must have paid the premiums yourself
  • The insurance must provide minimum essential coverage
  • You must maintain the insurance for the entire year
  • You cannot claim the deduction if you are eligible for employer-sponsored coverage

For 2017, the deduction is limited to the amount of your self employment tax. This means you can deduct up to twice your self employment tax or 50% of your self employment tax, whichever is less.

Form Instructions

To claim your self employment health insurance deduction for 2017, you'll need to complete Form 8959, "Additional Medicare Tax - Household Employment Taxes." Here's how to fill it out:

  1. Line 1: Enter your total health insurance premiums paid
  2. Line 2: Enter your self employment tax (25% of net earnings from self employment)
  3. Line 3: Calculate the deduction using the formula above
  4. Line 4: Enter the total deduction amount

Make sure to attach Form 8959 to your tax return. You'll also need to complete Schedule SE (Form 1040) to report your self employment income and tax.

Worked Examples

Let's look at two examples to illustrate how the deduction works.

Example 1: Low Self Employment Tax

If you paid $3,000 in health insurance premiums and your self employment tax was $2,000, your deduction would be:

  • Minimum of $3,000 (premiums), $4,000 (2 × $2,000), and $1,000 (50% of $2,000)
  • Deduction = $1,000

Example 2: High Self Employment Tax

If you paid $6,000 in health insurance premiums and your self employment tax was $4,000, your deduction would be:

  • Minimum of $6,000 (premiums), $8,000 (2 × $4,000), and $2,000 (50% of $4,000)
  • Deduction = $2,000

Frequently Asked Questions

Can I deduct health insurance premiums if I have other coverage?

No, you cannot claim the self employment health insurance deduction if you are eligible for employer-sponsored coverage. The deduction is only available to those who are not eligible for other coverage.

How do I report the deduction on my tax return?

You must complete Form 8959 and attach it to your tax return. You'll also need to complete Schedule SE (Form 1040) to report your self employment income and tax.

Can I deduct health insurance premiums for my family?

Yes, you can deduct health insurance premiums for yourself, your spouse, and your dependents. Make sure to include all premiums paid during the year when calculating your deduction.

What if I didn't have health insurance for the entire year?

You cannot claim the self employment health insurance deduction if you didn't maintain the insurance for the entire year. The IRS requires that you have coverage for the entire tax year to qualify for the deduction.