The Tax Break Every Florida Freelancer Needs to Know About
When I first went self-employed 8 years ago, I nearly choked on my coffee when I saw health insurance quotes. $800 a month? For ONE person? Then a smart accountant told me something that changed everything: “You know that’s basically 30% off with the tax deduction, right?”
Wait, what? Nobody had explained this to me. So let me save you the confusion I went through.
The Self-Employed Health Insurance Deduction (In Human Terms)
Here’s the deal: If you’re self-employed, you can deduct 100% of your health insurance premiums from your taxes. Not 50%. Not 75%. One hundred percent.
This isn’t some sketchy loophole. It’s a legitimate deduction the IRS created because they know we don’t have employer benefits. And in Florida, where we don’t have state income tax, this federal deduction is pure gold.
Real math from a real client:
Sarah, a wedding photographer in Delray Beach, pays $600/month for health insurance. That’s $7,200/year. With the deduction, she saves about $2,500 in taxes. So her insurance really costs her $4,700. That’s like getting four months free!
Who Actually Qualifies? (Spoiler: Probably You)
You can take this deduction if you’re:
- A freelancer or 1099 contractor
- A sole proprietor (that’s most small business owners)
- A partner in a partnership
- An LLC owner (in most cases)
- An S-corp owner (with some extra steps)
The main catch? You can’t be eligible for insurance through another job or your spouse’s job. But if you’re truly self-employed, you’re golden.
What Counts as “Health Insurance” for the Deduction?
YES, you can deduct:
✓ Medical insurance premiums
✓ Dental insurance
✓ Vision insurance
✓ Medicare premiums (all parts)
✓ Long-term care insurance (with limits based on age)
NO, you can’t deduct:
✗ Life insurance
✗ Disability insurance
✗ Accident insurance
✗ Insurance for just one disease (like cancer policies)
The Math That Makes You Smile
Let me show you how this works with real numbers:
Example: Marketing Consultant in Boca Raton
– Self-employment income: $75,000
– Annual health insurance: $9,600
– Tax bracket: 22%
Tax savings breakdown:
– Income tax saved: $2,112 (22% of $9,600)
– Self-employment tax saved: $1,469 (15.3% of $9,600)
– Total savings: $3,581
Actual insurance cost: $9,600 – $3,581 = $6,019
That’s a 37% discount just for being self-employed!
The HSA Bonus Round (This Is Where It Gets Good)
Want to save even more? Get a high-deductible health plan (HDHP) and open a Health Savings Account (HSA). Now you’re playing with power:
1. Deduct your HDHP premiums (usually lower than regular plans)
2. Contribute to an HSA and deduct that too
3. Use HSA money tax-free for medical expenses
4. Keep what you don’t use (unlike FSAs)
In 2025, you can put $4,150 (individual) or $8,300 (family) in an HSA. That’s more tax deductions on top of your insurance deduction!
Common Mistakes That Cost You Money
Mistake #1: “I’ll just skip insurance and save money”
One emergency room visit can wipe out years of “savings.” Plus, you’re missing out on thousands in tax deductions. Don’t do it.
Mistake #2: “My business barely made money, so I can’t deduct”
Your deduction can’t exceed your business profit, true. But if you made $20,000 and paid $10,000 for insurance, you can deduct the full $10,000.
Mistake #3: “I put it on the wrong tax form”
This goes on Schedule 1 of your 1040, NOT Schedule C. Put it in the wrong place and you miss out on self-employment tax savings.
Real Stories from Your Neighbors
Last month, I helped a personal trainer from Wellington who was paying $450/month for coverage. He thought he couldn’t afford it. When I showed him the tax savings, he realized it actually cost him less than $300/month after deductions. He signed up immediately.
Another client, a real estate agent in Boynton Beach, was already paying for insurance but didn’t know about the deduction. Her accountant had missed it for THREE YEARS. We filed amended returns and got her $8,000 back. She took a very nice vacation.
What You Need to Keep for Tax Time
Don’t stress – just save these things:
- Monthly insurance statements
- Proof you paid (bank statements, cancelled checks)
- Your 1095 forms from the insurance company
- Business income records (to prove you qualify)
Pro tip: Take photos of everything and save to a “2025 Taxes” folder in the cloud. Your future self will thank you.
The S-Corp Twist (If That’s You)
S-corp owners, you’re special (and not always in a good way). You need to:
- Have the company pay your premiums
- Include it as income on your W-2
- Then deduct it on your personal return
It’s annoying but worth it. Just make sure your accountant knows what they’re doing.
Your Action Plan (Let’s Make This Happen)
This Week:
1. Calculate what you’re paying annually for health insurance
2. Multiply by 0.37 to see approximate tax savings
3. Get excited about that number
This Month:
1. Make sure you have the right insurance for the deduction
2. Set up a system to track payments
3. Tell your accountant about this deduction (seriously, some don’t know)
This Year:
1. Consider if an HSA plan would save you even more
2. Keep good records
3. Enjoy your tax savings!
Let’s Talk Real Numbers for YOUR Situation
Look, I know taxes aren’t fun. But saving money? That’s fun. And this deduction is like finding money in your couch cushions, except it’s thousands of dollars.
I’ve helped hundreds of self-employed folks in South Florida understand this deduction and pick insurance that maximizes their savings. No confusing tax speak – just real talk about real money.
Ready to see how much you could save? Call me at 954-646-3666 or email yheaven@aol.com. Bring your insurance bills and let’s do some math that’ll make you happy.
P.S. If you’re paying for health insurance and NOT taking this deduction, you’re literally leaving money on the table. Let’s fix that.
Yvonne Heaven has been helping Florida’s self-employed community navigate health insurance since 2016. A business owner herself, she understands both the challenges of self-employment and the joy of finding legitimate tax savings. When she’s not helping clients save money, you’ll find her enjoying the perks of self-employment – like afternoon kayaking in our beautiful South Florida weather.
