So, I’ve always been afraid to accept health insurance thru an employer incase of events like Covid happening. So, I purchased a policy privately and have had the same policy my whole life (originally purchased thru COBRA from my mother’s employer).
Am I eligible for tax credit for paying all my premiums out of pocket? Or is that still a “loop hole” in the tax law. They keep saying they will change it. Did they?
First, with the increased “standard deduction” that became the tax law under 45, fewer people benefit from itemizing deductions.
Second, if you DO benefit from itemizing your deductions, your medical expenses (that would include medical insurance premiums, copays, and other out of pocket expenses) can ONLY be deducted if they total more than 7.5% of your AGI (adjusted gross income). If they total only 6%, for example, then the answer is: “Sorry Mohe, no deduction …”
At least that is my understanding for the 2020 tax year … and nobody knows what the rules for 2021 will be.
If you can find and use something like the free federal of TurboTax … or one of the other free federal versions … they are pretty good at collecting the data and then telling you whether itemizing or the standard deduction is best for you and, if you itemize, if you qualify for the medical deduction. Note: Intuit (who make TurboTax) have gotten in trouble for making it hard for you to find the free federal version and “accidentally” directing you to the “You Pay Us” version.
Again, I am not a tax expert, so “fact check” my comments.