How a 1099 worker deducts health, dental and vision premiums above the line: Form 7206, the net-profit limit, the months rule when a spouse has a plan, the S-corp route through Box 1, and the interaction with the credit.
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An employee’s premium comes out of pay before tax. A 1099 worker gets the same result a different way: the premiums come off adjusted gross income on the return, without itemizing, in any month there was no employer plan to join.
Premiums are set county by county and the credit is set by income, so no table can give a 1099 worker a final number. Enter your ZIP and a licensed agent prices every plan filed where you live against what you actually expect to earn.
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You had net profit from self-employment (Schedule C, Schedule F or a partnership’s guaranteed payments) and, for the months you claim, you were not eligible for an employer-subsidized plan through your own job or a spouse’s. Eligibility, not enrollment, is the test: a spouse’s open enrollment you declined still counts as available for those months. The deduction is month by month, so a year that is half W-2 and half 1099 gets the 1099 half.
Medical, dental and vision premiums for you, your spouse, your dependents and children under 27 at year end; qualified long-term care premiums up to the age-based limit; Medicare premiums for those who have them. The policy can be in your name. The amount is limited to the net profit of the business (less half of self-employment tax and any retirement deduction tied to it); premiums above that are an itemized medical expense instead.
Form 7206 computes it; the result lands on Schedule 1 as an adjustment to income. It reduces income tax but not self-employment tax: Schedule SE still runs on the full net profit.
A more-than-2%% S-corp owner cannot take the fringe benefit employees get. The corporation pays or reimburses the premium, adds it to Box 1 of the owner’s W-2 (not to Social Security or Medicare wages), and the owner takes this same deduction on the personal return. The step that gets missed is Box 1; miss it and the deduction is lost for the year. Check before the first January payroll: the December 31 checklist.
Only the part of the premium you actually paid, after the premium tax credit, is deductible, and the deduction lowers the income the credit is measured on. Publication 974 gives the iterative method; software handles it. The order matters less than the two facts: both apply, and both favour the 1099 worker who estimates income carefully.
Most states start from federal adjusted gross income, so the deduction flows through; a few adjust. The state pages on this site link to a state-by-state walk-through where one exists. Not tax advice: a tax professional owns the return.