8635. Is a taxpayer who is classified as an independent contractor, and thus self-employed, entitled to deduct the cost of health insurance coverage?Alexis Longrcline202014-07-07T22:24:00Z2014-07-07T22:24:00Z24082326Summit Business Media1952729148635. Is a taxpayer classified as an independent contractor, and thus self-employed, entitled to deduct the cost of health insurance coverage?A self-employed individual is generally entitled to deduct the cost of health insurance coverage. The IRS has ruled that a self-employed individual may deduct the medical care insurance costs for himself and his spouse and dependents under a health insurance plan established for his trade or business up to the net earnings of the specific trade or business with respect to which the plan is established. In determining this deduction limit under IRC Section 162(l)(2)(A), a self-employed individual may not combine the net profits from all his trades and businesses. However, if a self-employed individual has more than one trade or business, the individual may deduct the medical care insurance costs of the self-employed individual and his spouse and dependents under each specific health insurance plan established under each specific business up to the net earnings of that specific trade or business..CCA 200524001. According to the IRS, a self-employed individual may not deduct the costs of health insurance on Schedule C. The deduction under IRC Section 162(l) must be claimed as an adjustment to gross income on the front of Form 1040..CCA 200623001. Partners and sole proprietors are self-employed individuals, not employees. However, the deduction is not available to a partner or sole proprietor for any calendar month in which the individual is eligible to participate in any subsidized health plan maintained by any employer of the self-employed individual or spouse..IRC Sec. 162(l).Beginning in 2003, 100 percent of amounts paid during a taxable year for long-term care insurance up to the annual limits (see below) for an individual or spouse, or dependents can be deducted by a self-employed individual..IRC Sec. 162(l)(1)(B). Sole proprietors, partners, and S corporation shareholders owning more than 2 percent of an S corporation’s shares generally may take advantage of this deduction.The deduction for eligible long-term care premiums that are paid during any taxable year for a qualified long-term care insurance contract.See IRC Sec. 7702B(b). is subject to an annual dollar amount limit that increases with the age of the insured individual. In 2014, for taxpayers age forty or less, the limit is $370. For ages forty-one through fifty, the limit is $700. For ages fifty-one through sixty, the limit is $1,400. For ages sixty-one through seventy, the limit is $3,720. For those over age seventy, the limit is $4,660..Rev. Proc. 2009-50, 2009-45 IRB 617, as modified by Rev Proc. 2010-24, 2010-25 IRB 764. Rev Proc. 2013-35, 2013-47 IRB 537. The age is the individual’s attained age before the close of the taxable year. The limits are indexed annually for increases in the medical care cost component of the CPI (this is the so-called Medical Care Cost Adjustment) .IRC Sec. 213(d)(10).