When preparing to file annual tax returns, many people wonder about whether it is possible to deduct health insurance from taxes. In most countries, the ability to deduct health insurance premiums and other related expenses depends a great deal on the current laws governing the process of taxation. Most nations operate agencies similar to the IRS or Internal Revenue Service of the United States, and set the regulations related to claiming deductions through those agencies.
In the case of whether or not it is possible to deduct health insurance costs and related expenses, many of these national agencies do allow some type of deductions to be claimed. However, it is important to note that not every type of health insurance expense is automatically eligible for use as a deduction. Here are some examples of when and how a particular expense may be legitimately deductible.
For people who receive health insurance coverage through an employer, they cannot claim the entire health insurance premium as a deduction. However, employees who pay a portion of the premiums can often claim the amount that they actually pay toward the coverage as legitimate expenses. For instance, if the employer pays 60% of the monthly premium and the employee pays the remainder through a payroll deduction, the employee may claim that 40% as a legitimate medical expense on the annual return.
In many countries, it is permissible to list payments for services rendered that were not covered under the terms of the health insurance coverage. This would include co-pays on medication, visits to a healthcare professional, or any expenses connected with a medical procedure that were not paid by the insurance provider. However, it is important to note that some national tax agencies require that the cumulative amount of these out of pocket expenses exceed a certain percentage of the annual income before they can be claimed as deductions.
For people who are self-employed, health insurance payments are often fully deductible. Individuals who work for themselves can also claim all out of pocket medical expenses, such as co-pays on medical services and medications, as well as any charges that remain after the health policy has issued payment to the healthcare provider. The main stipulation is that the individual must pay the deductibles during the tax period for which they are claimed.
In order to properly deduct health insurance expenses, it is necessary to stay abreast of all current regulations and tax laws that are relevant to the jurisdiction where the individual resides. While many of the tax laws remain in place for many years and do not change, those laws are always subject to change from one tax period to the next. The burden of responsibility rests with the taxpayer to keep up to date on what constitutes legitimate deductibles. For this reason, it is a good idea to always check with the appropriate tax agency, so there is no question of how to deduct health insurance costs in a manner that is within the limits of the law.