Q. Are health insurance premiums deductible when submitting a NJ-1040 go back? The premiums have been paid by way of the worker. The top class is indexed in Field 14 as Phase 125 and integrated in Field 16. I’m serving to a relative with a go back.
— Serving to, I’m hoping
A. It’s great to you to assist your relative.
You undoubtedly wish to get any deductions proper.
Scientific bills, together with health insurance premiums, are deductible in your federal tax go back to the level they exceed 7.5% of your adjusted gross source of revenue, mentioned Bernie Kiely, a licensed monetary planner and authorized public accountant with Kiely Capital Control in Morristown.
New Jersey lets you deduct scientific bills to the level they exceed 2% of your source of revenue, he mentioned.
You discussed Field 14 and Field 16 “State Wages,” which refers back to the W-2 shape. You additionally referred to IRS Phase 125.
“IRS code Phase 125 lets in an employer to arrange a top class best plan, the place an worker’s insurance coverage top class contributions may also be deducted from his or her payroll on a pre-tax foundation,” he mentioned. “This may save workers as much as 40% on source of revenue taxes and payroll taxes.”
The employer additionally saves on those taxes, he mentioned.
“Because the scientific premiums have been paid for with pre-tax bucks, they aren’t deductible,” Kiely mentioned. “To take action can be double dipping.”
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Karin Worth Mueller writes the Bamboozled column for NJ Advance Media and is the founding father of NJMoneyHelp.com. Observe NJMoneyHelp on Twitter @NJMoneyHelp. In finding NJMoneyHelp on Fb. Join NJMoneyHelp.com’s weekly newsletter.