The 3-test Check for Your Health Insurance Deduction
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You pay for your own health insurance as a sole proprietor, partner, or S corporation owner and assume the deduction is automatic. It isn’t — three separate tests decide whether those premiums count for the self-employed health insurance deduction.
One test alone trips up more business owners than any other: eligibility for a spouse’s or a child’s employer coverage kills the deduction for those months, even if your spouse or child never enrolled in the plan.
An S corporation shareholder who pays premiums personally and skips the corporate reimbursement process or the W-2 process loses the self-employed health insurance deduction. Yep, you read that right: “no deduction.”