How the Deduction Works
If you write on Substack and get paid through paid subscriptions, you're generally self-employed, reporting that income and your expenses on Schedule C. Once you have net profit from that business, you may qualify for the self-employed health insurance deduction, which lets you write off premiums for medical, dental, and qualified long-term care insurance for yourself, your spouse, and your dependents.
This isn't a Schedule C business expense. It's an adjustment to income claimed on Schedule 1 of Form 1040 (the line for self-employed health insurance), which means it reduces your taxable income even if you take the standard deduction. It does not, however, reduce your self-employment tax, since it's calculated after Schedule SE.
Who Actually Qualifies
A few conditions have to be met:
- You must have net profit from your Substack (or combined self-employment activities) for the year. If your writing business had a loss, you can't take this deduction against other income.
- The deduction can't exceed your net self-employment earnings after subtracting the deductible portion of your self-employment tax.
- You (or your spouse, if filing jointly) can't be eligible to participate in an employer-subsidized health plan through a job, even if you don't enroll in it. This trips up a lot of writers whose spouse has a day job with health benefits available.
- The policy must be established under your business. In practice, for a sole proprietor this usually just means the policy is in your name, not necessarily under a formal business entity.
What Counts as Deductible Premiums
Qualifying premiums include:
- Marketplace or private individual health insurance plans
- Dental and vision plans
- Medicare Part B, Part D, and Medigap premiums if you're self-employed and Medicare-eligible
- Qualified long-term care insurance, up to age-based IRS limits
What doesn't count: any months you were covered by an employer plan (yours or a spouse's), and any premiums already paid with pre-tax dollars, like through a spouse's cafeteria plan.
How to Claim It
- Total your Substack (and other self-employment) net profit on Schedule C.
- Calculate your self-employment tax on Schedule SE.
- Add up annual premiums paid out of pocket.
- Enter the deductible amount, limited to your net self-employment income minus the SE tax deduction, on the self-employed health insurance line of Schedule 1.
If you have multiple 1099-NEC or 1099-K forms from Substack, Patreon, or other platforms, combine all self-employment net profit before applying the limit, since the deduction is based on total self-employment earnings, not just one income source.
Why This Matters for Quarterly Taxes
Because this deduction lowers your overall taxable income, it directly affects how much you should be sending in with Form 1040-ES estimated payments each quarter. Writers who buy their own insurance and forget to factor this in often overpay their estimates or miscalculate what they actually owe. Tracking premium payments monthly, alongside your subscription revenue and platform fees, makes this deduction easy to substantiate if the IRS ever asks for documentation.