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aamcz
Returning Member

Health insurance premium deduction for self employed?

While filing taxes and entering the 1095A forms from the health insurance marketplace, it says if I am self employed and my income is used to pay the marketplace health insurance premiums, then it is deductible and turbo tax will tie to to the self employed Schedule C for the deduction.

Question is...  we are a family of 4 (2 adults/2kids) and I am self employed (sole proprietor) and my spouse has regular employment through an employer; I am assuming we can still claim the premiums as a self employment deduction and tie it to my schedule C, even though all 4 of us are in the market place and it is not just me...

also I pay myself every so often out of my business account to our personal family account (which is where we pay the premiums from)

6 Replies
ColeenD3
Expert Alumni

Health insurance premium deduction for self employed?

Yes.

 

Self-Employed Health Insurance Deduction

 

You may be able to deduct the amount you paid for medical and dental insurance and qualified long-term care insurance for yourself, your spouse, and your dependents. The insurance can also cover your child who was under age 27 at the end of 2020, even if the child wasn’t your dependent. A child includes your son, daughter, stepchild, adopted child, or foster child. A foster child is any child placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction.

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 2020 from an S corporation in which you were a more-than-2% shareholder. Health insurance premiums paid or reimbursed by the S corporation are shown as wages on Form W-2.

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, C-EZ, or F, a policy can be either in the name of the business or in the name of the individual.
  • 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. Otherwise, the insurance plan won’t be considered to be established under your business.
  • For more-than-2% shareholders, a policy can be either in the name of the S corporation or in the name of the shareholder. You can either pay the premiums yourself or the S corporation can pay them and report the premium amounts on Form W-2 as wages to be included in your gross income. However, if the policy is in your name and you pay the premiums yourself, the S corporation must reimburse you and report the premium amounts on Form W-2 in box 1 as wages to be included in your gross income. Otherwise, the insurance plan won’t be considered to be established under your business.

Medicare premiums you voluntarily pay to obtain insurance in your name that is similar to qualifying private health insurance can be used to figure the deduction. Amounts paid for health insurance coverage from retirement plan distributions that were nontaxable because you are a retired public safety officer can’t be used to figure the deduction.

dmertz
Level 15

Health insurance premium deduction for self employed?

Note that you are not permitted to claim the self-employed health insurance deduction for the health insurance premiums that you paid for any month that you were eligible to participate in a health insurance plan provided by your spouse's employer (whether or not you actually participated in the plan provided by your spouse's employer).

aamcz
Returning Member

Health insurance premium deduction for self employed?

Replying to both you and demertz,

Yes there is no health insurance offered through my spouses employer.  This is the main reason we go through the marketplace.  My spouse though on the 1095A is listed as the recipient and I am listed as the recipients spouse in the info box; and under the covered individuals all 4 of us are listed (us two and our two children).  I’m assuming name order in the info box or in the account doesn’t matter, it’s just the order the insurance company representative had put us in when applying to  the marketplace.

Health insurance premium deduction for self employed?

I understand that I should be able to include my health insurance premiums, and that of my spouse, since I am self-employed and have only one business. I have been unable  to input the amount of the health insurance premiums. I am not sure why I can not update the business section that includes self employed health insurance premiums. 

Help!  I know that the amount will end up on Schedule 1, Line 17.  Is there a way to override the system and input the information.  I have spent many hours working on this. In the other years that I have used Turbo tax I have been able to input the self employed health insurance premiums. I am getting really frustrated with this since I should be allowed to input the information.

Thank you

Health insurance premium deduction for self employed?

The Turbotax home and business program is NOT allowing me to update and add the amount of the self employed insurance premiums in the business section. I know I qualify. Why is the program NOT allowing me to update and input the amount????

 

DaveF1006
Employee Tax Expert

Health insurance premium deduction for self employed?

It depends if your business is showing a net profit or not. If you are showing a net loss then the program will not allow you to update and add.

 

One quick question for clarification, if your business is showing a net profit, are you entering this under insurance payments shown in the section entitled let's Write off Some Business Expenses?

 

 

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