Qualifications

• To take a deduction for your health insurance premiums, the IRS requires at least one of the following to be true: you were self-employed and made a profit for the year; you use either option on the 1040 Schedule SE to calculate self-employment tax; or you received wages from an S corporation in which you were more than a 2 percent shareholder, and health insurance premiums paid for you, your spouse and/or your dependents were reported as wages on your Form W-2. If any one of these statements is true, you can use the IRS worksheet to find out how much you can deduct for health insurance.
  
  

Exception

• If at any time during any month or partial month you were eligible to participate in a subsidized health plan offered by an employer (either yours or your spouse's), you cannot deduct health insurance premiums for that month. Last year's Patient Protection and Affordable Care Act extended this exception to include subsidized health insurance plans offered by employers of your dependents or children under 27 after March 30, 2010.
  
  

Other Exceptions

• If you have multiple sources of self-employment income and foreign earned income, or you are figuring your deduction using premiums paid for long-term care insurance, the IRS says to use Publication 535 (Business Expenses) to determine the amount that can be deducted. There are also some other exceptions if you were a recipient of trade adjustment assistance, alternate trade adjustment assistance or re-employment trade adjustment assistance, or you received a Pension Benefit Guaranty Corp. pension.
  
  

Ask if You Don't Know

• If you are uncertain about whether you meet the eligibility criteria to deduct your health insurance premiums, seek the advice of a certified public accountant, preferably one who has experience working with the self-employed. If you take a deduction you aren't eligible for, the IRS can assess interest and penalties for the tax amount you should have paid had you not taken the deduction.