If you're self-employed as a rideshare or delivery driver and pay for your own health insurance, you can often deduct those premiums directly against your income, on top of your mileage deduction. It's one of the more overlooked write-offs available to gig drivers filing Schedule C.
Who qualifies
The self-employed health insurance deduction is available if you have net profit from self-employment for the year, you or your spouse are not eligible to participate in an employer-subsidized health plan (through a spouse's job, for example), and the policy is established under your business.
How much you can deduct
You can deduct premiums for medical, dental, and qualified long-term care insurance for yourself, your spouse, and your dependents, up to your net profit from the business for the year. If your business shows a loss, or your net profit is less than your premiums, the deduction is capped at that profit figure for the year.
Where it goes on your return
This is an above-the-line deduction, meaning it's taken on Schedule 1 of Form 1040, not as an itemized deduction and not on Schedule C itself. It reduces your adjusted gross income directly, which is more valuable than an itemized deduction since you get it whether or not you itemize.
How it interacts with your mileage deduction
Mileage reduces net profit on Schedule C, which in turn caps how much health insurance premium you can deduct above the line. A driver who under-logs mileage understates business expenses, which inflates net profit on paper and can also inflate the ceiling for this deduction, but at the cost of overpaying self-employment tax on income that wasn't really available. Logging mileage accurately keeps both numbers honest.
Does this cover my whole family's health insurance?
Yes, premiums for your spouse and dependents can be included, as long as you're not eligible for employer-subsidized coverage through either spouse's job.
Can I take this deduction and still owe self-employment tax?
Yes. This deduction reduces income tax, but it does not reduce the profit figure used to calculate self-employment tax.
Sources: IRS, Publication 535, Business Expenses, self-employed health insurance deduction. IRS, Form 1040 Schedule 1 instructions.
Your net profit determines how much of this deduction you can claim. TruMile keeps your mileage deduction accurate, so your profit number is too. Try TruMile →
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