Arkansas Life and Health Insurance Practice Exam 2025 - Free Life and Health Insurance Practice Questions and Study Guide

Question: 1 / 400

When Peter, an independent contractor, purchased his own personal medical and dental insurance, he discovered that:

Independent contractors cannot deduct any of the costs

Self-employed persons may deduct up to 100% of the cost of health insurance for themselves and their dependents

The correct answer is that self-employed persons may deduct up to 100% of the cost of health insurance for themselves and their dependents. This is an important tax provision that applies to independent contractors like Peter who are considered self-employed. The deduction allows them to reduce their adjusted gross income by the amount spent on health insurance premiums, which can significantly impact their tax liability.

The ability to deduct these costs is intended to help self-employed individuals manage the financial burden associated with purchasing health and dental insurance, which can be quite high. This provision applies to all qualifying health insurance premiums, not just for the individual but also for their dependents, highlighting its value in providing comprehensive coverage.

The other options do not convey the accurate details regarding the deductibility of health insurance costs for self-employed individuals.

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The costs are only deductible for dental insurance

The costs cannot be deducted if they have dependents

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