I'm retired and get my health insurance partially subsidized by my former employer. I'm now self employed with net income. How much may I deduct on Sch C?

[caldwell3_87401]

I'm being audited and the IRS auditor tells me I cannot take any Sch C deductions for the unreimbursed med premiums, because my insurance premiums are partially subsidized by my former company (I retired after 32 years and they partially subsidize the premiums). I still pay over $8000/yr unreimbursed premiums and as a small business owner, I can't take any deductions other than Sch A?

[Marketstar · Accepted solution]

To deduct health insurance on Schedule C, the policy must be in your name or the business name. If you or your spouse could participate (even if you declined coverage) in an employer's health plan at any time during a given month, you cannot take the deduction for that month. However, payments for those months are deductible on Schedule A if you itemize deductions.

Your deduction for self-employed health insurance is limited to net income on your Schedule C less the deductible part of your self-employment tax