In mid-May, I shut down one self-employed business and started up a new one. All along, I paid my marketplace health insurance plan each month throughout the entire year (no subsidies fwiw).
TurboTax makes me assign the inputted 1095-A to only one of my two self-employed jobs I had this year, but the 1095 covers 12 months and the businesses spanned 4.5 months and 7.5 months consecutively.
I tried breaking the same 1095-A into two 1095-A's, one with Jan-May premiums and the other with June-December premiums, but then I get an error in the Forms because each 1095-A has the same exact identifier number.
Should I just allocate the entire 1095-A to the business I started in May?
Is there a better solution?
You will be able to select either of the self-employed businesses to be the sponsor of your health insurance policy in the marketplace section of TurboTax. You will be asked to designate one after you enter Form 1095-A. It is a deduction up to the net profit of that business and after any Advance Premium Tax Credits are applied.
The other self-employed business was not concurrent, so you can designate it as the business sponsor for the remainder of the year. There is no place to enter this in the Marketplace section but you may enter that portion of the net premiums you paid in Schedule C for the other business, in the Expenses section, under Self-employment Health Insurance.
If you also had vision, dental, or long-term care insurance, these were not included in the numbers for the main health care policy in the 1095-A. You may also enter these into the Schedule C for each of the businesses, dividing by the months of the year.
For additional information, you may review in IRS Publication 535, Business Expenses Just scroll down the left side menu and look for Insurance then Self-employed Health Insurance Deduction.
Only one self-employed business may be designated as a sponsor of a health insurance policy at the beginning of the year and you cannot combine the net income of multiple concurrent businesses for purpose of the deduction, although you can change the designation in the following year. This is per IRS Chief Counsel Memo 200524001
[Edited 01/17/22 10:56 am PST] instructions how to enter deductions for two self-employed businesses which were active during different months of the year.
@dripstone
Thank you. That's helpful.
While associating the policy, TurboTax asks, "What was the first month in 2021 that the business operated?"
My business that operated longer went from May to December so I will choose that one. But this means I won't get to deduct my premiums paid from January through April, despite operating a now-closed self-employed business during that time, too.
My business that operated longer went from May to December so I will choose that one. But this means I won't get to deduct my premiums paid from January through April, despite operating a now-closed self-employed business during that time, too. Wrong ... just follow the interview and review the form 8962 later.
>just follow the interview and review the form 8962 later.
What do you mean by follow the interview? I'm not aware of any interview.
The entire TT program is one long interview starting in the MY INFO tab and ending in the FILE tab.
The interview is just the steps you are filling out either online or in the Desktop program. Not by entering directly into the forms in the Desktop program.
@dripstone wrote:I tried breaking the same 1095-A into two 1095-A's, one with Jan-May premiums and the other with June-December premiums,
That is the proper way to do it. If the program gives you an error, that is a software limitation.
However, if the profit of each business was higher than the cost of insurance for that time period, in most cases the end result would be the same as if you allocated it all to one business.
So is this statement from the first reply incorrect?
"The IRS will allow only one business to sponsor a policy per year."
Yes, there is no such restriction.
It gets slightly more messy if you try to apply two business to the same policy during the same time period (but I've seen nothing that disallows that situation either). But there is absolutely no question that it is allowed to have two businesses apply for two different time periods.
Thanks @AmeliesUncle.
@TeresaM Are you able to cite a source for your claim that "The IRS will allow only one business to sponsor a policy per year?" Another commenter claims there is no such restriction. Thank you.
I have edited the original answer to keep everything all together but here is the source for nominating one business to sponsor the health insurance policy at the beginning of the year.
This is per IRS Chief Counsel Memo 200524001
@TeresaM wrote:but you may enter that portion of the net premiums you paid in Schedule C for the other business, in the Expenses section, under Self-employment Health Insurance.
No, you can not enter it there because it will not be using the Iterative calculation for the Premium Tax Credit and the Self Employed Health Insurance deduction.