September 16, 2016

Can A Single Member LLC Get A Health Insurance Deduction?

Can a single member LLC which has only part time employees deduct health insurance premiums for it sole member/owner?

Answer

Yes, thanks to a 2003 tax change.

You might find some older advice, written before the 2003 tax change, that will tell you only corporations can deduct health insurance premiums.

The deduction for health insurance premiums for the self-employed can be found on line 29 of your Form 1040.

Note a couple of caveats:

1. Your SMLLC must have been profitable: You can only deduct health insurance premiums paid up to the amount of the LLC’s profits.

2. You must not have been eligible for coverage under your own employer’s (assuming you have a job outside of your LLC’s business) or your spouse’s employer’s health insurance plan.

3. The insurance should be setup under your LLC, covering you + dependents.

4. If the SMLLC has no employees, the sole owner/member can still purchase an individual health insurance policy and deduct the premiums (to the extent of profits) as described above.

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