topic Self Employed Medical Insurance in Business & farm

Self Employed Medical Insurance

jcaaps — Tue, 01 Dec 2020 20:22:16 GMT

My spouse is self employed, and I am retired. We buy our medical insurance from my FORMER employer, it is NOT subsidized. Can we deduct the cost of this insurance as part of the calculation of my spouse's business income? I know it is generally deductible, question is whether the fact that we buy it through my former employer and in my name impacts out ability to deduct. Thanks in advance.

Re: Self Employed Medical Insurance

DoninGA — Tue, 01 Dec 2020 20:31:20 GMT

Since the medical insurance was not established under your spouse's business it cannot be deducted as a Self-Employed Health Insurance Deduction.

The insurance premiums paid can be deducted on Schedule A as an itemized deduction. However, only your total medical expenses that are greater than 7.5% of your Adjusted Gross Income (AGI) can be deducted. Your total itemized deductions reported on Form 1040 Schedule A must be greater than the standard deduction for your filing status to have any tax benefit.

Re: Self Employed Medical Insurance

jcaaps — Tue, 01 Dec 2020 20:38:58 GMT

Thanks for the quick response. That was my concern... still doesn't seem to make sense (nothing new for the IRS) that if we canceled the current policy, and got a new one (at the same cost)... then we could deduct it.

Re: Self Employed Medical Insurance

jcaaps — Tue, 01 Dec 2020 21:43:34 GMT

As I read the 1040 instructions, the policy "can be either in the name of the business or in the name of the individual".... this policy covers both of us, lists both of us individually (there is no business name, no corporation, no LLC, etc).

Re: Self Employed Medical Insurance

DoninGA — Tue, 01 Dec 2020 22:06:45 GMT

@jcaaps wrote:

As I read the 1040 instructions, the policy "can be either in the name of the business or in the name of the individual".... this policy covers both of us, lists both of us individually (there is no business name, no corporation, no LLC, etc).

As stated in IRS Publication 535, Business Expense on page 20 - https://www.irs.gov/pub/irs-pdf/p535.pdf#page=20

The insurance plan must be established, or considered to be established as discussed in the following bullets, under your business.
• For self-employed individuals filing a Schedule C or F, a policy can be either in the name of the business or in the name of the individual

In the situation you have described where your spouse is listed as one of the policy owner's it would seem to be acceptable to claim the deduction as a Self-Employed Health Insurance Deduction to be entered as an Adjustment to Income on Form 1040 Schedule 1, Line 16 (2019)

Re: Self Employed Medical Insurance

Hal_Al — Tue, 01 Dec 2020 23:35:43 GMT

"Through my former employer and in my name"

"this policy covers both of us"

I interpret those two statements to mean that only your are the policy holder. Your spouse is just an induvial covered by the insurance, no more so than a child dependent is a "covered individual" and not the policy holder. That is the insurance policy is "not in her name"

Re: Self Employed Medical Insurance

Anonymous — Wed, 02 Dec 2020 01:27:30 GMT

the IRS is not at fault. Congress writes the tax laws. yes. there are many stupid laws. HSA are even worse in my opinion. Write to your Federal Senators and Representatives to find out their position on this law and would they do something to change it. Then vote when they're up for re-election.