Deduct Health Care Premiums for Family When Employer Only Pays for Me
"You can deduct what you pay for your own and your family's health insurance regardless of whether it is subsidized by your employer or not, as well  as all other medical and dental expenses for your family, as an itemized deduction on Schedule A of Form 1040, but only to the extent that the  total exceeds 7.5% of your Adjusted Gross Income (AGI) (10% on tax returns for year 2013 onwards). As pointed out in KeithB's comment, you cannot deduct any health insurance premium (or other medical expense) that was paid for out of pre-tax dollars, nor indeed can you deduct any medical expense to the extent that  it was paid for by the insurance company directly to hospital or doctor (or reimbursed to you) for a covered expense; e.g. if the insurance company reimbursed you $72 for a claim for a doctor's visit for which you paid $100 to the doctor, only $28 goes on Schedule A to be added to the amount that you will be comparing to the 7.5% of AGI threshold, and the $72 is not income to you that needs to be reported on Form 1040. Depending on other items on Schedule A, your total itemized deductions might not exceed the standard deduction, in which case you will likely choose to use the standard deduction. In this case, you ""lose"" the deduction for medical expenses as well as all other expenses deductible on Schedule A. Summary of some of the discussions in the comments   Health care insurance premiums cannot be paid for   from HSA accounts (IRS Pub 969, page 8, column 2, near   the bottom) though there are some exceptions.  Nor   can health care insurance premiums be paid from an   FSA account (IRS Pub 969, page 17, column 1, near the top). If you have a business on the side and file a Schedule C as a self-employed person, you can buy medical insurance for that business's employees (and their families too, if you like) as an employment benefit, and pay for it out of the income of the Schedule C business, (thus saving on taxes). But be aware that if you have employees other than yourself in the side business, they would need to be covered by the same policy too.  You can even decide to pay all medical expenses of your employees and their families too (no 7.5% limitation there!) as an employment benefit but again, you cannot discriminate against other employees (if any) of the Schedule C business in this matter.  Of course, all this money that reduced your Schedule C income does not go on Schedule A at all. If your employer permits your family to be covered under its health insurance plan (for a cost, of course), check whether you are allowed to pay for the insurance with pre-tax dollars.  The private (non-Schedule C) insurance would, of course, be paid for with post-tax dollars.  I would doubt that  you would be able to save enough money on taxes to make up the difference between $1330/month and $600/month, but it might also be that the private insurance policy covers a lot less than your employer's policy does.  As a rule of thumb, group insurance through an employer can be expected to offer better coverage than privately purchased insurance. Whether the added coverage is worth the additional cost is a  different matter.  But while considering this matter, keep in mind that privately purchased insurance is not  always guaranteed to be renewable, and a company might decline to renew a policy if there were a large number of claims. A replacement policy might not cover pre-existing conditions for some time (six months? a year?) or maybe even permanently.  So, do consider these aspects as well.  Of course, an employer can also change health insurance plans or drop them entirely as an employment benefit (or you might quit and go work for a different company), but as long as the employer's health plan is in existence, you (and continuing members of your family) cannot be discriminated against and denied coverage under the employer's plan."
To fairly compare a comp-only job to a job that offers insurance, get a quote for health insurance. Call your local insurance broker and find out what it would cost. Because if you aren't getting insurance from your employer, you'll have to get it elsewhere. If you get a quote on an HSA, don't forget to add in the annual deductible as part of the cost. On the ESPP, I'd count it as zero. The rationale being that so much of your financial status is tied to your employer that you don't really want to tie up too much more in company stock. (I.e. Company hits hard times, stock tanks, and then they lay you off. Double whammy -- both your assets and income.) But given that I've only been employed by companies that no longer exist in their original form, my perspective may be warped. There is a dependent care spending account for child care related expenses. Also Medical and Dental expenses over a certain % of your income maybe deductible on your tax return. "I don't think so. There is a provision in ObamaCare called ""community rating"" that applies starting in 2014. Insurance companies must place individual and small group plans into a pool of people from the same geographical region. The same plan must cost the same for all small businesses from the same region. So having employees who have high costs will not significantly affect the company's cost; it will get factored into the cost for all people in the area; but the effect gets averaged out over all businesses and individuals who have plans." Gifts from your parents are not treated as income for tax purposes. You should not include that in your subsidy calculation. If you are here on a student-visa and have been in the US for less than 5 years, then you are considered a non-resident alien, and you are not required to buy a qualified plan through the insurance marketplace. You might be able to get a cheaper student plan through your school, but the subsidy might be enough that it's still worth it when calculated correctly. If you are a resident-alien or you are a citizen of the US, then you are required to get coverage, though you can choose not to purchase coverage and pay the tax for not having creditable coverage. That tax cannot be collected by the IRS unless you have already had federal tax withheld. They can only confiscate your tax return money to recoup that money. I don't have enough information to recommend one way or the other what you should do, but I would bet that if you recalculated your subsidy without including your parents income it would cover the majority of the cost. You should also consider applying for Medicaid if you meet the eligibility requirements in your state. "Yes, you can. See the instructions for line 29 of form 1040. Self employed health insurance premiums are an ""above the line"" deduction." In the US there's no significant difference between what a business can deduct and what an individual can deduct. However, you can only deduct what is an expense to produce income. Businesses are allowed to write off salaries, but individuals can't   write off what they pay their gardener or maid (at least in the US) If you're a sole proprietor in the business of managing properties - you can definitely deduct payments to gardeners or maids. Business paying for a gardener on a private property not related to producing the income (like CEO's daughter's house) cannot deduct that expense for tax purposes (although it is still recorded in the business accounting books as an expense - with no tax benefit). Businesses are allowed to deduct utility expenses as overhead, individuals cannot Same thing exactly. I can deduct utility expenses for my rental property, but not for my primary residence. Food, shelter, clothing and medical care are fundamental human needs,   but we still pay for them with after-tax money, and pay additional   sales tax. Only interest (and not principal) on a mortgage is   deductible in the US, which is great for people who take out mortgages   (and helps banks get more business, I'm sure), but you're out of luck   if you pay cash for your house, or are renting. Sales taxes are deductible. You can deduct sales taxes you paid during the year if you itemize your deduction. You can chose - you either deduct the sales taxes or the State income taxes, whatever is more beneficial for you. BTW in many states food and medicine are exempt from sales tax. Medical expenses are deductible if they're significant compared to your total income. You can deduct medical expenses in excess of 10% of your AGI. With the ACA kicking in - I don't see how would people even get to that. If your AGI is low you get subsidies for insurance, and the insurance keeps your expenses capped. For self-employed and employed, insurance premiums are pre-tax (i.e.: not even added to your AGI). Principle for mortgage is not deductible because it is not an expense - it is equity. You own an asset, don't you? You do get the standard deduction, even if your itemized (real) deductions are less - business don't get that. You also get an exemption amount (for your basic living needs), which businesses don't get. You can argue about the amounts - but it is there. In some States (like California) renters get tax breaks for renting, depending on the AGI. CA renters credit is phasing out at AGI of about $60K, which is pretty high. Not optional, but I assumed the premise was that with out having to pay for health care corporations would pay more in wages. In the US that is never going to be true.   In other words they would use the VAT and not having to pay for health care as an excuse to extract more profit. Employee wages wouldn't go up, corporate health care costs would go down, and the VAT would be passed on to the consumer through higher prices. Essentially obamacare act is forcing me NOT to claim my sister as my dependent (although I provide > 51% for her).  No, that's not what it's doing. It's forcing you (or her) to get insurance. So, as a big sister I can provide for her, but NOT claim her as my dependent. Do I understand everything correctly?  The exemption (that gave you that $1K back) can only be claimed by you, she cannot claim it. So by not claiming her you're giving that up. Her medical bills will probably be on you as well, so it would be in your best interest to have her insured. If you want to dump her on the taxpayer in case of a medical emergency - then yes, it will cost you the tax benefit of the additional exemption and the HOH deduction (depending on your tax rates, probably a couple of thousands of dollars). Either way you'll pay. The answer likely depends a bit on which state you are in, but this should be true for most states.  I don't know anything about Pennsylvania specifically unfortunately. The Affordable Care Act created the SHOP marketplace, which allows small businesses to effectively form larger groups for group coverage purposes.  SHOP stands for Small Business Health Options Program, and requires only one common-law employee on payroll. This would effectively allow you to offer group coverage without having a group.  Talk to your tax accountant for more details, as this is still very new and not necessarily well understood. There are some other options, all of which I would highly suggest talking to a tax accountant about as well.  HRAs (health reimbursement accounts) allow the employer to set aside pre-tax funds for the employee to use for approved medical expenses; they're often managed by a benefits company (say, Wageworks, Conexis, etc.).  That would allow your employee to potentially pick a higher deductible health plan which offers poorer coverage on the individual marketplace (with after-tax dollars) and then supplement with your HRA. There are also the concept of Employer Payment Plans, where the employer reimburses the employee for their insurance premiums, but those are not compatible with the ACA for the most part - although there seems to be a lot of disagreement as to whether it's possible to have something effectively the same work, see for example this page versus this for example. Basically a company who provides health insurance for their employees provides it as part of the employee's salary package. This is an expense by the company in its pursuit of making income. In general, tax deductions are available on any expense incurred in deriving income (the exception is when social policy allows deductions for other types of expenses). If you pay for your own health insurance individually, then this expense is not an expense for you to derive your income, and as such is not tax deductible. There is some magic involved in that calculation, because what health insurance is worth to you is not necessarily the same it is worth for the employer. Two examples that illustrate the extreme ends of the spectrum: let's say you or a family member have a chronic or a serious illness, especially if it is a preexisting condition - for instance, cancer. In that case, health insurance can be worth literally millions of dollars to you. Even if you are a diabetic, the value of health insurance can be substantial. Sometimes, it could even make financial sense in that case to accept a very low-paying job. On the other extreme of the scale, if you are very young and healthy, many people decide to forego insurance. In that case, the value of health insurance can be as little as the penalty (usually, 2% of your taxable income, I believe). I'm an independent tech contractor in Canada.  The single payer health care makes it so much easier to be a contractor or to create a startup.  I have to wonder if the lack of healthcare in the US is the result of businesses trying to retain white collar workers that would otherwise go independent.  In this environment, it's little surprise that I prefer getting those big cheques over getting benefits.  Usually the benefit packages are little more than dental, many of which only provide partial coverage. You have to consider that taxes that you pay on the premiums is money definitely paid, while benefits being tax free won't save you a thing if you never receive the benefits. I don't think anyone can give you a definitive answer without knowing all about your situation, but some things to consider: If you are on a 1099, you have to pay self-employment tax, while on a W-2 you do not. That is, social security tax is 12.4% of your income. If you're a 1099, you pay the full 12.4%. If you're W-2, you pay 6.2% and the employer pays 6.2%. So if they offer you the same nominal rate of pay, you're 6.2% better off with the W-2. What sort of insurance could you get privately and what would it cost you? I have no idea what the going rates for insurance are in California. If you're all in generally good health, you might want to consider a high-deductible policy. Then if no one gets seriously sick you've saved a bunch of money on premiums. If someone does get sick you might still pay less paying the deductible than you would have paid on higher premiums. I won't go into further details as that's getting off into another question. Even if the benefits are poor, if there are any benefits at all it can be better than nothing. The only advantage I see to going with a 1099 is that if you are legally an independent contractor, then all your business expenses are deductible, while if you are an employee, there are sharp limits on deducting employee business expenses. Maybe others can think of other advantages. If there is some reason to go the 1099 route, I understand that setting up an LLC is not that hard. I've never done it, but I briefly looked into it once and it appeared to basically be a matter of filling out a form and paying a modest fee. The United States Federal Reserve has decided that interest rates should be low. (They think it may help the economy. The details matter little here though.) It will enforce this low rate by buying Treasury bonds at this very low interest rate. (Bonds are future money, so this means they pay a lot of money up front, for very little interest in the future. The Fed will pay more than anyone who offers less money up front, so they can set the price as long as they're willing to buy.) At the end of the day, Treasury bonds pay nearly no interest.   Since there's little money to be made with Treasuries, people who want better-than-zero returns will bid up the current-price of any other bonds or similar loan-like instruments to get what whatever rate of return that they can. There's really no more than one price for money; you can think of the price of those bonds as basically (Treasury rate + some modifier based on the risk) percent.  I realize thinking about bond prices is weird and different than other prices (you're measuring future-money using present-money and it's easy to be confused) and assure you it ultimately makes sense :) Anyway. Your savings account money has to compete with everyone else willing to lend money to banks. Everyone-else lends money for peanuts, so you get peanuts on your savings account too. Your banking is probably worth more to your bank on account of your check-card payment processing fees (collected from the merchant) than from the money they make lending out your savings (notice how many places have promotional rates if you make your direct deposits or use your check card to make a purchase N times a month).  In Europe, it's similar, except you've got a different central bank. If Europe's bank operated radically differently for an extended period of time, you'd expect to see a difference in the exchange rates which would ultimately make the returns from investing in those currencies pretty similar as well. Such a change may show up domestically as inflation in the country with the loose-money policy, and internationally as weakness against other currencies. There's really only one price for money around the entire world. Any difference boils down to a  difference in (perceived) risk.