Insurance Write-Offs for the Self-Employed

Self-employed people are eligible for some insurance write-offs under certain conditions. For instance, if they have home offices, they may be able to write off a portion of their home insurance costs or the whole cost of separate insurance purchased for their business equipment. Read on below to find out how the self-employed can qualify for insurance write-offs and the process of claiming them.

Health Insurance Write-Offs

If you are a self-employed person in an unincorporated sole proprietorship, you can write off the cost of your health insurance against your income for the year if you established the health insurance coverage through your business. Consider joining the National Association for the Self-Employed (NASE) to qualify for a better rate on health insurance programs. Consult the map at their website to find out the health insurance benefits and deductions offered in each state. Find out as well about group health insurance firms that now offer health insurance programs for "groups of one," namely sole proprietors and self-employed people. If you as a self-employed person offer health insurance in a group package to your employees, you can write off your share of the cost of the premiums against your payroll taxes.

Who Cannot Write Off Health Insurance

You cannot write off your health insurance costs as a self-employed person if you are or can be covered under a spouse's employer-based policy. Work out the costs and benefits of having your own health insurance policy before you decide to pay for your own coverage. If you have income from another full-time job that provides you with health insurance, you cannot write off the cost of extended health care insurance. Self-employed people who obtain health insurance independent of their businesses (simply an individuals) cannot write off the premiums.

Business Insurance Write-Offs

As a self-employed person, you should consider having insurance for your business equipment, particularly if it is in a workspace outside your home. Even with a home office, an insurance policy that is completely separate from your home insurance will help keep your costs down. If your business equipment is stolen or damaged, you will be able to get it replaced and continue doing business. You can write off the cost of this insurance as a business expense against your net income. If you have a production business, you should also consider getting liability insurance, which you can also write off against your self-employed income.

Maximum Write-Offs for Insurance

The write-offs you take for insurance as a self-employed person cannot exceed your net self-employment earnings.

How to Claim Insurance Write-Offs

File an IRS Schedule C form, "Profit or Loss from Business," to record all your business expenses, including your health and business insurance. As of 2011, you will also need to complete and file a Schedule SE from the IRS if your business earnings totaled $400 or more. If you use part of your home as a home office, consult IRS Publication 587 to determine whether you qualify to deduct the costs of your home office, including business equipment insurance, from your self-employment income.