Schedule C Premium Deductions for Solo Practitioners

The mechanism.

A self-employed attorney with net Schedule C income may deduct health insurance premiums, dental premiums, and qualified long-term care premiums above the line on Schedule 1, line 17. The deduction reduces adjusted gross income directly — meaning it lowers both income tax and the AGI used to calculate marketplace subsidies.

• Medical premiums for the attorney, spouse, dependents, and adult children under 27 are deductible
• Dental and vision premiums are equally eligible
• Long-term care premiums are deductible subject to age-banded caps
• Premiums paid through a marketplace plan reduce the deduction by any premium tax credit received

The earned-income limitation.

The deduction is capped at net earnings from self-employment, less the deductible portion of self-employment tax and any retirement contributions. In practice: in a year where the practice clears $40,000 but premiums total $50,000, only $40,000 of premium is above-the-line deductible. The remainder may itemize as a medical expense — usually a far less valuable outcome.

The S-corp trap.

An S-corporation attorney must include health insurance premiums in W-2 wages (Box 1) to preserve deductibility. Premiums paid directly by the corporation without W-2 inclusion are non-deductible by the shareholder. This rule catches more single-shareholder S-corp counsel than any other tax structural issue we see, and the consequences are not retroactively curable.

A practical sequence.

1. Determine the entity classification for the full year
2. Total all premiums paid for medical, dental, vision, long-term care
3. Reduce by any premium tax credit received from the marketplace
4. Confirm net SE income exceeds the premium total
5. For S-corp counsel, confirm W-2 Box 1 inclusion of the gross premium