Level 15
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Deductions & credits

here are  the 'gotcha's - as there multiple

 

you stated in your original comments that "I get subsidized health insurance through my spouse's employer"  but the real issue is whether her employer offers a LTC plan, whether you participate or not. 

 

and on page 23 of pub 535 it states (left column): 

 

"You can’t take the deduction for any month you were eligible to participate in any employer (including your spouse's) subsidized health plan at any time during that month, even if you didn’t actually participate."

 

it further states, "These rules are applied separately to plans that provide long-term care insurance and plans that don’t provide long-term care insurance. "

 

if your spouse's employer offers LTC benefit plans, you can't deduct the premiums.

 

so let's assume her employer doesn't offer LTC plan benefits, then it goes back to your position in the partnership. See page 6

 

One of the following statements must be
true.
• You were self-employed and had a net
profit for the year reported on Schedule C
(Form 1040), Schedule C-EZ (Form 1040),
or Schedule F (Form 1040).
You were a partner with net earnings from
self-employment for the year reported on
Schedule K-1 (Form 1065), box 14, code
A.
• You used one of the optional methods to
figure your net earnings from self-employment on Schedule SE.
• You received wages in 2018 from an S corporation in which you were a

 

I suspect the bold bullet is germane since you were posting a k-1 but that is a guess on my part.  Do you have net earning with a Code A in Box 14?  If no, then there is no deduction possible

 

and then there is this 'gotcha'... you stated you are paying the premium yourself but did not state whether the partnership is reimbursing you; if they are not reimbursing you, it's not deductible. (page 21 in the middle column)

 

• For partners, a policy can be either in the name of the partnership or in the name of  the partner. You can either pay the premiums yourself or the partnership can pay them and report the premium amounts on Schedule K-1 (Form 1065) as guaranteed
payments to be included in your gross income. However, if the policy is in your name and you pay the premiums yourself, the partnership must reimburse you and report the premium amounts on Schedule K-1 (Form 1065) as guaranteed payments to be included in your gross income.

so what the IRS is really saying is that you can treat the premium as a pre-tax benefit of the partnership if the partnership declares income equal to the premium and then you deduct the premium so it's effectively a "pre-tax" payment no different than the pre tax medical premium benefit your spouse probably enjoys via her employer.

 

But if you simply decided to take out an LTC policy that is irrespective to an employer or partnership benefit, then it can only be deducted as an itemized deduction on Schedule A subject to the a) the premium limit for your age bracket b) to the extent it exceeds 7.5% of your AGI and c) to the extend you itemize in the first place 

 

is that enough "gotcha"s? 

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