@tk94110 wrote:
On a related issue, in 2019 tax return, I could claim the premium as a business expense.
Now, for this year, I was asked for how long I am in business (or something like that). After this W-2 gig ended in July, I could not find a new project but I continued the sales activities. As an evidence, I did get a project this January. Although I did not have any income from my business since February, can I claim the premium as a business expense since I continued business activities?
What premium are you talking about? Do mean health insurance premiums? Health insurance premiums for yourself and your family are not a business expense. TurboTax causes some confusion about this by having you enter self-employed health insurance premiums on the same screen as business expenses. But the health insurance premiums are used for the self-employed health insurance deduction, which is an adjustment on Schedule 1, not a business expense on Schedule C.
You can't claim the self-employed health insurance deduction for premiums that you paid for any month in which you were eligible for employer-subsidized health insurance. Essentially all employer-provided health insurance is subsidized, so if you were eligible for health insurance from your employer during the months that you were a W-2 employee, whether or not you actually took the employer's insurance, you cannot use the premiums for those months for the self-employed health insurance deduction. You could claim the premiums for the other months, including the months that you had no work. But the self-employed health insurance deduction is limited to your net business income minus the deduction for half of your self-employment tax. Since you had only one month of business income, this will severely limit the amount of premiums for which you can claim the self-employed health insurance deduction.
If you itemize deductions, any health insurance premiums that you cannot use for the self-employed health insurance deduction can be included in your medical expenses on Schedule A.
