Tax Year Prior to 2020: self-employed insurance deductions

[gorillapusillo]

I have 1099 income.  Can I take self-employed health insurance deductions?

[AlanT222]

When you're self-employed you may be able to deduct medical, dental, or long-term care insurance premiums that you paid for yourself, your spouse, and your dependents.

We'll check to see if you qualify for one or both of the following deductions after you enter your premiums in the self-employed business expense section or the Affordable Care Act section if you received a Form 1095-A.

Self-employed health insurance deduction

• This deduction is carried over from line 29 of Schedule 1 to line 7 of Form 1040.
• The deduction is generally limited to your net profit from your self-employment (or your self-employed earnings as a partner or your paid wages as a shareholder in an S corporation).
• You can't include premiums for any month you were also eligible to participate in any subsidized health plan maintained by any employer of you, your spouse, your dependent, or your child who was under age 27 at the end of the tax year.
• Your child (under age 27 at the end of the tax year) can be included even if they aren't your dependent.

Medical and Dental Expenses on Schedule A, Itemized Deductions

• Premium amount is reduced by any self-employed health insurance deduction you claimed.
• You can't deduct insurance premiums paid with pretax or tax-free dollars.

[gorillapusillo]

Thank you very much, I appreciate the quick and informative answer!  I have another question.  Health insurance premiums for my husband and me, as well as long term care insurance premiums, are higher than the 1099 income I received.  Can I claim those excess premiums on the 1040 portion of our tax return?

[WKins2]

That is okay if the insurance premiums under the self-employed health insurance section causes you to have a business loss. The loss from the business will offset any other income you all have on your return. You should report all the self-employed business health insurance under the business section for the deduction. 

[gorillapusillo]

Thank you very much.  I really appreciate your expert help!

[Lobelia]

You stated, "The loss from the business will offset any other income you all have on your return."  Does that include interest and dividends, RMD's?

Thanks!

[DaveF1006]

Yes, it will offset/reduce any taxable income that is generated by these sources.   

[Lobelia]

Thank you so much for your answer.  I am using the Premier version of TT and can't get to the deductions section for self-employed income.

[VolvoGirl]

@Lobelia @Are you using the Online Premier version or the Desktop CD/Download Premier?

For Online,  

You can enter Self Employment Income into Online Deluxe or Premier but if you have any expenses you will have to upgrade to the Self Employed version.  How to enter income from Self Employment

https://ttlc.intuit.com/community/self-employed/help/how-do-i-report-income-from-self-employment/00/...

For Desktop,

Go to Federal Taxes Tab

Wages and Income

Choose Jump to Full List -or I'll choose what I work on

Then scroll way down to Business Items

Then click EDIT by the business name and the next screen should be a list of  topics,

Business Profile, Income, Inventory/Cost of Goods Sold, Expenses, Assets, and Final Details last.

[JWDyna]

I am self-employed.  Do I include health insurance purchased through a Health Insurance Marketplace in my Business Expenses. These premiums were entered on Form 1095-A.  It looks like they shows up both under personal and business deductions.  Is that correct?

[VolvoGirl]

Do not enter any Health Care Marketplace insurance you bought under business.   If you enter the 1095-A and select the "Self-employed and bought a Marketplace plan" box, it will automatically include those premiums in the SE Health Insurance section.  So you shouldn't enter it again on schedule C.

Self-employed health insurance deduction goes on Form 1040 Schedule 1 line 16 then to 1040 line 8a, as long as the expense is not greater than your net self-employment income. If it does exceed your net self-employment income it gets split automatically. An amount equal to your net self-employment income goes on Form 1040 Schedule 1 line 16, and the remainder gets added in to medical expenses on Schedule A.

[rpeterjackson23]

Hi Volvogirl, I am at a loss here (pun intended)...I'm a sole proprietor, and this year I ended up paying my subcontractor more than I was paid from my employer (approximately 2380.00). I am getting flagged to fill out a schedule C with this info but I don't know what any of it means, and the site gives no guidance:

A Other preferences and adjs (see Help)

B1 At risk disallowed loss (enter as positive amt)

2 Related Disposition at risk disallowed loss

a Short term and ordinary disallowed loss

b Long term (section 1231) disallowed loss

C 1Passive disallowed loss

2 Related Disposition passive disallowed loss

a Short term and ordinary disallowed loss

b Long term (section 1231) disallowed loss

Can you help me with this?

[VolvoGirl]

You are a sole proprietor and you are an employee?  You get a W2 from your employer?  Or do you get a 1099Misc?

If you only get 1099Misc income or are a sole proprietor you don't have an employer, you have clients and customers.  You report it as self employment income on Schedule C.  I don't understand your question.  I don't know what all those lines you posted refer to.  

Do you need to report the subcontractor on schedule C?  If you  paid one person more than $600 total for the year you need to give them a 1099Misc.  That is Contract Labor on Schedule C line 11.

How to enter Contract Labor

https://ttlc.intuit.com/community/entering-importing/help/how-do-i-enter-contract-labor/00/27407

What version are you using?  If you are using the online version you need the Self Employed version to enter self employment expenses.

[rpeterjackson23]

Yes, Self employed. I get a 1099 MISC from the Gov, and I give a 1099 MISC to my subcontractor (while giving the IRS a 1096). I am not sure which version I am using but it let me put in the contractor expenses, so my income came down. My 1099 from the gov was 15k, while I paid my subcontractor 18k (because of timeframe payouts near the end of the calendar year). 

I think it rectified once I changed the numbers to no expenses and then re-entered the expenses. However, I would like to claim that 3K as a loss for this year. Thanks for the help!

[VolvoGirl]

You should be able to claim on Loss on schedule C.  For 2019 Schedule C Net Profit or Loss now goes to 1040 Schedule 1 line 3.  Then the total on schedule 1 line 9 goes to 1040 line 7a.

Is it not letting you show a loss?  

Some expenses, such as home office or section 179 depreciation can only be used to reduce your schedule C taxable income to zero, and not to create a loss. Excess deductions for these carry over to the next year.  And you have to answer yes to both questions about exclusive and regular use, not just one.  The area of your home office must be used regularly and exclusively for business to deduct it.

Or you checked the box on 32b saying Some Investment is Not at Risk.  I bet that's what you did.  You need to say All your Investment is at Risk (check Box 32a). It means you are using your own money for the business.

Ok here are the steps for 2018 Onilne returns, hopefully it's the same for 2019.  2 ways to get there

Go to the Search box in the upper right and type in Schedule C

Then click on Jump to Schedule C

Click on Edit or Review by your Business name

Go to Uncommon Situations - click Edit or Start

Make sure the 5th box is NOT checked for "I have money invested in the Business that I'm not at risk of losing"  and probably check the None of Above Box.

then Continue

OR

Click on Federal on the Left side

Income & Expenses at the top

Self Employment (2nd item in  listing) click on Start or Show More/Start or Review

Click Review by your Business name

Scroll down to Uncommon Situations - Click Start or Edit

Make sure the 5th box is NOT checked for "I have money invested in the Business that I'm not at risk of losing" and probably check the None of Above Box.

then Continue