Health ins partnership

[TAXMAN]

Partner ship pays health insurance for partner(1065). Is being included in income on Sch e and a deduction on front of 1040. Why would it also be subject to SS tax? My head won't wrap around this.

[mcb39]

Probably because the Partnership is taking it as a deduction, thus it is not included in his share of Partnership income, before the addition of the Health Insurance. Therefore, SE tax only once and the deduction on the front of the 1040.

It took me a few minutes to wrap my head around this too and still may not be correct, but I think so.

I cannot believe the number of SE returns that are coming in from other preparers who never took the SE Health insurance deduction.

[TAXMAN]

Will look closer at the partnership return. First look looks like they included in the income number going to sch e then se tax from k-1 looks like they left it in to be subject to se. I will put personal return on hold till I figure this one out. Anybody got a quick way to tell?

[jklcpa]

It's probably deducted as part of the guaranteed payments to the partner, and that's why it's subject to SE tax. If the premiums weren't paid out of the partnership, then the partner would have higher income flowing through as ordinary trade or business income, so the SE income and SE tax would be the same anyway.

[mcb39]

It's probably deducted as part of the guaranteed payments to the partner, and that's why it's subject to SE tax. If the premiums weren't paid out of the partnership, then the partner would have higher income flowing through as ordinary trade or business income, so the SE income and SE tax would be the same anyway.

That's what I was trying to say, though not so fluently. Thanks Judy.

[kcjenkins]

Judy is spot-on on this