Small Business Tax Savings Podcast Turn Medical Bills Into Tax Deductions (4 Ways to Deduct Health Costs)
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Oct 22, 2025 Medical bills can hurt your bottom line, but there are clever ways to turn them into tax deductions. Explore how self-employed individuals can deduct health insurance and maximize Health Savings Accounts for triple tax benefits. Learn about Section 105 plans that convert personal medical costs into deductible business expenses. Plus, discover options for providing health benefits to employees, including QSEHRA. These strategies help protect your cash flow and boost your savings while keeping you compliant with IRS regulations.
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Claim Self-Employed Health Insurance Correctly
- If you pay your own premiums as a business owner, claim the self-employed health insurance deduction on your 1040 Schedule 1.
- S‑Corp owners must have the S‑Corp pay premiums, reimburse via an accountable plan if needed, and add the amount to box 1 of their W‑2 to keep the deduction.
Health Premiums Lower S‑Corp Payroll Taxes
- Adding health premiums to W‑2 box 1 increases reported wages but avoids FICA taxes in boxes 3 and 5.
- That lets S‑Corp owners meet a reasonable salary threshold while reducing payroll tax exposure.
Max Out And Invest Your HSA
- If you qualify for an HSA, max it out because contributions are tax deductible, grow tax‑free, and withdraw tax‑free for qualified medical expenses.
- Treat your HSA like a retirement account: invest funds and avoid spending to let it compound for future medical costs.