SELF EMPLOYED HEALTH INSURANCE

[GeorgeM]

New client has business, health insurance not in his name but is being paid through his wife's employer. Is this deductable as self employed health ins.

She pays the whole premimum out of her pay.

[jklcpa]

New client has business, health insurance not in his name but is being paid through his wife's employer. Is this deductable as self employed health ins.

She pays the whole premimum out of her pay.

No, the policy would have to be either in the name of his business or an individual policy, or medicare. Also, his business would have to show a profit after deducting 1/2 s.e. tax and any related SEP-IRA, SIMPLE-IRA, or Keogh deduction.

Also, he cannot deduct any insurance costs for any months he was eligible to participate in a subsidized group health insurance plan through his spouse's employer.

[Guest Taxed]

Jklcpa is correct. This is one area where many tax preparers make a mistake. I see this a lot when i pick up a new Sch C client. Generally the wife has a small job to get the family medical and dental insurance, but the Self employed husband deducts one half of the premiums??

[SaraEA]

jklcpa is absolutely correct that no SE health insurance deduction is allowed if the individual is eligible for group coverage under someone else's plan. Also, the odds are about 100% that the spouse's insurance premiums come out of her pay pre-tax. You can't deduct something from taxable income that was never included in taxable income in the first place.

[Crank]

I thought it HAD to be in the business name.

[jklcpa]

I thought it HAD to be in the business name.

No, it can be in the individual's name. Here's from the 1040 instructions:

The insurance plan must be established under your business. Your personal services must have been a material income-producing factor in the business.

If you are filing Schedule C, C-EZ, or F, the policy can be either in your name or in the name of the business.

If you are a partner, the policy can be either in your name or in the name of the partnership. You can either pay the premiums yourself or your partnership can pay them and report them as guaranteed payments. If the policy is in your name and you pay the premiums yourself, the partnership must reimburse you and report the premiums as guaranteed payments.

If you are a more-than-2% shareholder in an S corporation, the policy can be either in your name or in the name of the S corporation. You can either pay the premiums yourself or the S corporation can pay them and report them as wages. If the policy is in your name and you pay the premiums yourself, the S corporation must reimburse you. You can deduct the premiums only if the S corporation reports the premiums paid or reimbursed as wages in box 1 of your Form W-2 in 2013 and you also report the premium payments or reimbursements as wages on Form 1040, line 7.