Self employed health premiums greater than income - should I split it

[carolynt2]

My health insurance premiums are greater than my self-employed earnings, so I can't take the full deduction through schedule 1.  Turbotax has reduced the deduction (not sure how it came up with the amount.

I am also claiming medical expenses greater than 7.5% of my total income through the personal deduction section. 

Should I subtract the amount that Turbotax came up with for schedule 1 from my total premiums and enter the remainder as medical premiums in the personal deduction section?

Total premiums $29,409

Turbotax calculation on schedule 1 $18,691 (how does Turbotax figure out this amount?)

Remainder $11,718

[VolvoGirl]

No it automatically goes to schedule A.   How much is your net profit on Schedule C?

Self-employed health insurance deduction goes on Schedule 1 line 17 (which goes to 1040 line 10), 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 Schedule 1 and the remainder gets added in to medical expenses on Schedule A. It will not reduce any SE Tax on a net profit. It just reduces your AGI.

[carolynt2]

Thank you.  Yes, that makes sense.  I have entered it how you suggested and the balance has automatically been applied to medical expenses.

A by-product of putting the medical premiums as a business expense in Schedule 1 is that my business net profit is now zero, thus reducing my qualified business deduction considerably.  When I enter the medical premiums all under the Schedule A personal medical expense deduction my refund is actually higher.

Is there any benefit to putting the medical premiums as a business deduction instead of on Schedule A as a personal medical expense?  The only benefit I see is that it lowers my AGI for eligibility for a Roth IRA, but this is not relevant for me.

[DawnC]

You generally get a larger deduction on Schedule 1 because Schedule A is an itemized deduction that most people can't take advantage of.   Also, the Schedule A itemized deduction is limited to the amount over 7.5% of AGI.   Neither deduction lowers your net profit from the business.   You won't find the self-employed health insurance deduction on Schedule C; the only health insurance that is entered directly on Schedule C is health insurance you paid for any employees.   It does get subtracted out in order to calculate QBI, though.    

You can see how TurboTax calculated the amount on Line 17 of Schedule 1 by looking at Form 7206.   It will show the total of your health insurance premiums paid, and your business net income.   If the premiums are more than net income, the allowed amount goes to Schedule 1 and the remainder goes to Schedule A.