Deduct medical expenses on your taxes

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(FORTUNE Small Business) -- Dear FSB: I'm a consultant. Can I deduct the cost of medical insurance? Currently, I pay the entire cost.

- Ronald Sonberg, Concord, N.H.

Dear Ronald: Yes.

"How you do it can depend on what type of entity you operate under, but in general, you can write off 100 percent of your health insurance," says Jeff Berdahl, CPA, president of Berdahl & Company, P.C. in Center Valley, Penn. He suggests listing it as an Adjustment to Income on line 29 of your 1040.

Dave Gorsich, a licensed tax professional in San Diego, says that if you're self-employed, list the cost of your health insurance premiums on the front page of your return, not inside the business.

"If you mix it within the business schedule, things get complicated as far as issues of 'compensation,'" says Gorsich, who teaches tax law to professionals in his series of "Brass Tax Presentations."

"If you're a partnership, LLC, or an S-Corp, things become a little stickier," he says.

There are a few major rulings from the IRS regarding the mechanics of how subchapter S-Corps can benefit from these types of deductions. "You still can," says Gorsich," but you have to jump through extra hoops."

The bottom line, he says, is that a small businessperson can still get an up-front deduction for medical premiums.