Question

In the current year, Roger pays a $3,500 premium for high-deductible medical insurance for him and his family. In addition, he contributed $2,975 to a Health Savings Account. a. How much may Roger deduct if he is self-employed? Is the deduction for AGI or from AGI?

If Roger is self-employed, he may deduct $_____ AGI.

Answer 1

If Roger is self-employed, he may deduct the premiums for his high-deductible medical insurance and his contributions to his Health Savings Account (HSA) from his Adjusted Gross Income (AGI). The deduction for self-employed individuals is taken on Schedule 1 (Form 1040) and is an above-the-line deduction, meaning it reduces the individual's AGI.

Step-by-step explanation:

If Roger is self-employed, he may deduct the premiums for his high-deductible medical insurance and his contributions to his Health Savings Account (HSA) from his Adjusted Gross Income (AGI). The deduction for self-employed individuals is taken on Schedule 1 (Form 1040) and is an above-the-line deduction, meaning it reduces the individual's AGI.

For the current year, Roger pays a $3,500 premium for high-deductible medical insurance and contributes $2,975 to his HSA. Therefore, his total deduction would be $3,500 + $2,975 = $6,475.

To claim this deduction, Roger should consult with a tax professional or refer to the IRS guidelines for self-employed individuals.

If Roger is self-employed, he can deduct the $3,500 premium for high-deductible medical insurance for him and his family, as well as the $2,975 contribution to a Health Savings Account (HSA). These deductions are considered above-the-line deductions, meaning they are deductions for adjusted gross income (AGI) and not from AGI. Above-the-line deductions reduce both the AGI and taxable income, potentially placing a taxpayer in a lower tax bracket, which can reduce the overall tax liability.