Self-employed health insurance deduction


Z

zvkmpw

TP is a self-employed teacher who deals directly with the individual
students.

TP has a health insurance policy as an individual subscriber.

Do the premiums qualify for the self-employed health insurance
deduction on Form 1040 line 29?


The reason for asking is that the 1040 instructions say, "The
insurance plan must be established under your business" (page 30).
This seems peculiar to me. It's repeated in Publication 535.

OTOH, immediately afterward Publication 535 says, "For self-employed
individuals filing a Schedule C, C-EZ, or F, the policy can be either
in the name of the business or in the name of the individual." TP will
file C or C-EZ, so this provision apparently overrides the
instructions.


Assuming the deduction can be taken, the second question is, "How much
can be deducted?"

TP became self-employed August 2009, and uses cash-based accounting,
and remains self-employed into 2010.

Premiums were paid during 2009 in March (for Apr-May-Jun), in June
(for Jul-Aug-Sep), in September (for Oct-Nov-Dec), and in December
(for Jan-Feb-Mar, 2010). My guess is that (a) the premiums covering
August-December, 2009 can be reported, and that (b) the December
premium would carry over to 2010's return. Is this right?
 
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P

paulthomascpa

zvkmpw said:
TP is a self-employed teacher who deals directly with the individual
students.

TP has a health insurance policy as an individual subscriber.

Do the premiums qualify for the self-employed health insurance
deduction on Form 1040 line 29?


The reason for asking is that the 1040 instructions say, "The
insurance plan must be established under your business" (page 30).
This seems peculiar to me. It's repeated in Publication 535.

OTOH, immediately afterward Publication 535 says, "For self-employed
individuals filing a Schedule C, C-EZ, or F, the policy can be either
in the name of the business or in the name of the individual." TP will
file C or C-EZ, so this provision apparently overrides the
instructions.


Assuming the deduction can be taken, the second question is, "How much
can be deducted?"

TP became self-employed August 2009, and uses cash-based accounting,
and remains self-employed into 2010.

Premiums were paid during 2009 in March (for Apr-May-Jun), in June
(for Jul-Aug-Sep), in September (for Oct-Nov-Dec), and in December
(for Jan-Feb-Mar, 2010). My guess is that (a) the premiums covering
August-December, 2009 can be reported, and that (b) the December
premium would carry over to 2010's return. Is this right?



The insurance premium is deductible in the year paid, so the December
payment, for the first three months of 2010, are 2009 deductions.

Yes, the earlier amount paid should only be for the time she was
self-employed forward, so 2/3rds of the payment made in June sounds about
right, and all of the September and December payments.
 
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R

removeps-groups

TP is a self-employed teacher who deals directly with the individual
students.

TP has a health insurance policy as an individual subscriber.

Do the premiums qualify for the self-employed health insurance
deduction on Form 1040 line 29?

The reason for asking is that the 1040 instructions say, "The
insurance plan must be established under your business" (page 30).
This seems peculiar to me. It's repeated in Publication 535.

OTOH, immediately afterward Publication 535 says, "For self-employed
individuals filing a Schedule C, C-EZ, or F, the policy can be either
in the name of the business or in the name of the individual." TP will
file C or C-EZ, so this provision apparently overrides the
instructions.

Assuming the deduction can be taken, the second question is, "How much
can be deducted?"

TP became self-employed August 2009, and uses cash-based accounting,
and remains self-employed into 2010.

Premiums were paid during 2009 in March (for Apr-May-Jun), in June
(for Jul-Aug-Sep), in September (for Oct-Nov-Dec), and in December
(for Jan-Feb-Mar, 2010). My guess is that (a) the premiums covering
August-December, 2009 can be reported, and that (b) the December
premium would carry over to 2010's return. Is this right?
They have a bizarre rule that if you could be covered by your spouse's
plan, even if you chose not to, then your health insurance premiums
are not deductible.

http://www.irs.gov/publications/p535/ch06.html

Other coverage. You cannot take the deduction for any month you were
eligible to participate in any employer (including your spouse's)
subsidized health plan at any time during that month. This rule is
applied separately to plans that provide long-term care insurance and
plans that do not provide long-term care insurance. However, any
medical insurance payments not deductible on Form 1040, line 29, can
be included as medical expenses on Schedule A (Form 1040), Itemized
Deductions, if you itemize deductions.
 

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