Self-employed health insurance deduction disappears with larger IRA contribution

Forum|Forum|6 years ago
July 10, 2020
1 reply
5 views

When I up my larger IRA contribution, the Self-employed health insurance deduction goes away making me owe taxes.

Is this a glitch, or a weird IRS regulation/limitation? It doesn't seem like one would be dependent on the other.

BillM223

Level 15

Is this an IRA contribution or an SEP-IRA contribution?

The SEP-IRA contribution and the self-employed health insurance deduction affect each other in some not-obvious ways, when they approach the size of your business' net income.

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carolync321Author

Level 2

It is an IRA, not a SEP-IRA. It is no where near getting close to my income.

BillM223

Level 15

Hmmn, I agree that this is not obvious.

So your IRA deduction is appearing on line 19 of Schedule 1 (1040)? And there is nothing on line 15 of the same schedule?

On your Schedule SE, did you use the short-form or the long-form?

Do any of the following apply to you?

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.

I am reading the instructions for line 16 in the Schedule 1 instructions.

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