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Self-Employed Health Insurance Deduction

Question: I keep hearing that the Affordable Care Act disallows the self-employed health insurance deduction. For example, a shareholder of an S corporation cannot be reimbursed for health insurance and deduct it on his Form 1040. Is this true?

Answer: This is not true. Although P.L. 111-148, named the Affordable Care Act, altered many provisions in the tax code, it did not impact §105, §106, §125 or §162(l) which govern the deduction (or exclusion) of health insurance. What this law does affect, however, are many additional tax provisions and credits such as the net investment income tax of 3.8% or the excise taxes for failure to carry insurance.

Featured in the TAXPRO Weekly - October 10, 2013

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