Form 7206

[mootzie]

I have a business in my name and my husband has a separate business in his. We both file Schedule C with our 1040. He claims health insurance on his. Do we have to file a Form 7206 for each of our businesses or do we not have to file one at all? TT did not prepare one for us. Did we have to download it and file it and the rest of our return by paper?

[DawnC]

Is the amount on Line 17 of Schedule 1 correct?   The deduction does not go on Schedule C; it gets deducted on Form 1040 - Schedule 1.   The self-employed deduction directly reduces your income, whereas the itemized deduction goes to Schedule A and is limited (less tax benefit).  

Generally, you can use the worksheet in the Form 1040 instructions (that is what TurboTax used for your return) to figure your deduction. However, if any of the following apply, you must use Form 7206:

• You had more than one source of income subject to self-employment tax.
• You file Form 2555.
• You are using amounts paid for qualified long-term care insurance to figure the deduction.

[mootzie]

Here's where my question comes in. We had more than one source of self employment income - one under my ssn and one under his ssn. he used his self employment business to claim the health insurance. so do we meet the requirements to file a form 7206 if the source of self employment income was just for his business under his ssn? Or does the form have to be filled out because I also had self employment income regardless of whether or not I claim health insurance deduction under my business? I took a 2nd look and TT did fill out a form 7206 under his business and included my self employment income for line 5. 

I was not able to e file my return because of R0000-058-01 and am assuming it's because of this form 7206 based on everything I have been reading. I have filed for an extension. 

So...is it possible that TT will correct this before Oct 15, do I really have to file a form 7206, and will I be able to efile because of the extension if this all gets corrected?

[Vanessa A]

Clarification...When you say My return versus his return are you talking about Schedule C's?  Or did you file as Married Filing Separately?

You said he received the deduction, but your income is included.  That should not be the case.  Your self-employment income should not be on his Schedule C.  Did you create 2 separate businesses by selecting add a business and then making sure each person is assigned as the correct owner of the business?

If you are using TurboTax Desktop, form 7206 is not supported for e-file so you will need to print and mail your return. 

[mootzie]

I know it's confusing to explain. We are filing married filing jointly. He has self employment income reported on Schedule C for his own business and is claiming a deduction for Medicare insurance premiums paid in 2023 for both him and me. I, too, have self employment income for my own separate business reported on a Schedule C. Does this mean that because we both have self employment income even though one business is in his name and one is in my name, he has to fill out Form 7206 and include both of our net profits on line 5?

[KristinaK]

I think the confusion stems from the fact that you stated that Medicare payments were covering both of you. But Medicare covers only individuals, not couples/families. So it's possible that you actually have two payments for Medicare: one for you, and one for your spouse. You just need to separate these and report each of yours with your own Schedule C's, generating your own 7206, if applicable. 

@mootzie