Can I deduct Self-Employed health insurance for the full year if I retired during the year?

[Daddude]

I retired at the end of April last year. For the self-employed health insurance deduction, can I deduct premiums for the full year (my profits exceed the premium cost), or can I only deduct for payments made until the end of April when I retired?

[dmertz · Accepted solution]

The only requirements are that your deduction for self-employed health insurance premiums does not exceed the net earnings available to support the premium payments claimed for the deduction (net profit minus the sum of the deductible portion of SE taxes and any self-employed retirement deduction), and that the insurance is in your name or the name of your business.    The fact that you might not have received any more self-employment income after some point in the year is irrelevant.  Being a disregarded entity, a sole proprietorship is a calendar-year business.

[Daddude]

So this is exactly why I asked the question. On the one hand, I stopped generating new income at the end of April (but received payments later).

But on the other hand I'm a single individual LLC reporting all my business income on schedule C. Self employed income is lumpy. As long as I earned more than the premiums I'm deducting, seems like that meets the criteria. 

So please help me out, tax experts. Which way is it?

[DawnC · Accepted solution]

You can claim the SEHI (self-employed health insurance) deduction if you have positive net income on Schedule C for the tax year.    Enter your premiums in the business expenses section, and TurboTax will give you the credit you are allowed.   Any excess will go to Schedule A.    Where to enter SEHI

As a self-employed person, you may be eligible to deduct health insurance premiums for yourself, your spouse, and your dependents. The policy can also cover your child under age 27, even if you’re not claiming them as a dependent.   Keep in mind that you’re only eligible to claim the write-off for health insurance premiums during the months when you're not eligible to participate in any employer-subsidized health plan.    This is known as the month-by-month eligibility rule.

If your self-employment activity is a sole proprietorship that generated a tax loss for the year, you’re not allowed to claim the deduction because your deduction can’t exceed the earned income you collect from your business. This is known as the earned income limitation rule.

[Daddude]

Thank you all for your responses. Dawn, thank you for your detailed answer. Your answer is consistent with the documentation I can find on this issue. The only 2 criteria seem to be that 1) I did not have access to any employer-subsidized health plan in any month of 2023 (neither I nor my wife had any other employer); and 2) my income/profits exceeded the cost of the premiums. I met both of those criteria for the full year. While not including health insurance premiums after April is an easy initial answer, I do not see any written basis for that being a requirement. 

Since I am a sole proprietor and my LLC did not cease to function after April (it still exists as a legal entity, collected additional income, paid additional estimated taxes, etc) and might be used again in the future if I take additional contracts, it seems reasonable to me that the business would cover my health insurance premiums through the end of 2023. 

Thanks again for the input!