Partner self-paid medical insurance entry

[Pearl56]

The partner paid their own medical insurance. I asked this question and saw this solution (copied below) but it is unclear to me. 1) Are these steps to be taken in Turbo Tax Business? If so, there is no tab labeled 'Wages and Income ' or 'Wages and Expenses'. 2) I am using TT Home and Business to file the personal tax return using the K-1s from the partnership and TT H&B doesn't seem to have these tabs either. What am I missing? 3) The K-1 doesn't include anything in Box 13 since the partnership didn't pay the medical insurance.

Last year, there was a simple entry for Medical Insurance Paid Personally in the Home and Business product. Now I can't even enter it manually through the form. Please help.

Self-employed health insurance deduction for partners and LLC members

SOLVED•by TurboTax•

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Updated 4 weeks ago

General Partners and LLC members who are considered general partners can claim the Self-Employed Health Insurance (SEHI) deduction as an adjustment to income on Schedule 1 of Form 1040, rather than a deduction on Schedule A. This is a more advantageous option than claiming it as an itemized deduction on Schedule A. Medical expenses claimed on Schedule A are not deductible until they exceed 7.5% of your adjusted gross income.

A policy can be either in the name of the partnership or in the name of the partner. The policy can include you, your spouse, dependents, and any children under age 27 who are not dependents.

You can either pay the premiums yourself or the partnership can pay them and report the premium amounts on Schedule K-1 in box 13 with a code M.

Here are the steps to ensure you get the SEHI Deduction associated with your partnership income reported on your Schedule K-1 (Form 1065):

1. Open your tax return, if you haven't already
2. Select Federal, then Wages & Income (this may show as Wages & Expenses depending on your program)
3. Scroll down and select Show more next to S-Corps, Partnerships, and Trusts
4. Start Schedule K-1
5. On the Did you receive any Schedules K-1? screen, select Yes
6. Select Start next to Partnerships/LLCs (Form 1065)
7. On the Partnership Name and Address screen, enter the info and select Continue.
8. Continue entering your info
9. Once you get to the Check Boxes That Have an Amount screen, your K-1 should have an amount for Self-Employment Income and, if your partnership paid for the SEHI, an amount for box 13 with a code M. You may have any number of other boxes that have amounts listed, as well
10. Once you have completed the entry of your box 13 code M (if applicable) and box 14 (required for a SEHI deduction), select Continue. Enter any remaining info for the other boxes on your K-1
11. On the Describe the Partnership screen, if you paid your own insurance premiums, check the box next to I personally paid health insurance and/or long-term care insurance premiums for myself and my family
    1. If you checked the above box, you’ll see the Unreimbursed Partnership Expenses screen. Select Yes
12. Continue through the screens until you reach the screen for Any Self-Employed Insurance Costs? Enter any amounts you paid personally on these screens

Once you’ve completed your Schedule K-1 entry, your premium amounts will show as a Self-Employed Health Insurance Deduction on Schedule 1, line 17.

Note: Your deduction for SEHI may be limited by the amount of the self-employed income reported by the partnership (less the self-employment tax on that income).

[FangxiaL]

Click on the PERSONAL tab to enter your Sch K-1:   

[Pearl56]

This answer did not resolve my issue.

The partner self paid so the amount paid doesn't show up on the K-1 received.

Where should the partner enter this amount on their personal return in order to get credit for it? Or, does the partner have to be reimbursed by the partnership for the amount paid and the partnership write it off?

[PatriciaV]

Please clarify that you are a general partner and have info on your Schedule K-1 Lines 13 or 14. 

[Pearl56]

Yes, it's for a general partner but there is no info on lines 13 or 14.

[Vanessa A]

As you walk through the steps above to enter the K-1, you will come to a screen that says Describe the Partnership on this screen you can select I personally paid health insurance and/or long term care insurance premiums for myself and my family. 

Once you do that, the next screen will ask for the amount of premiums you paid. Enter the premiums on this screen. 

[Pearl56]

Sorry - I'm on Windows 11 and it's not letting me Snip and Save a screenshot. However, on the K-1 'Describe the Partnership' page, the options are as follows:

   This is a publicly traded partnership

   This is a foreign partnership

   This partnership ended in 2021

   Disposed of a portion of my interest in this partnership in 2021

   I received an amended K-1 for this partnership

   None of these apply

Why is this different from your screenshot? I am using Turbo Tax 2021 Home and Business to file the personal return.

[ThomasM125 · Accepted solution]

@Pearl56 

You will see the Describe the Partnership title that @Vanessa A describes after you enter the box 1 amount and indicate which boxes have numbers on your k-1 schedule. The descriptions you mention are also asked, but earlier in the routine where you enter your K-1 schedule. 

[Pearl56]

ThomasM125 - thank you for clarifying where the entry was located! Two thumbs up to you!

[A Walsh]

I have followed these instructions but they do not work.  I'm using Desktop Premium.  My income from a partnership is on Form K-1 (1065) and I pay my own health insurance premiums.  When I follow the instructions above, my premiums are included in the medical expenses on Schedule A, not on line 17 of Schedule 1 as they should be.  I cannot override it.  This looks like a bug.  Please advise.

[ShirlynW]

IRS Pub 502, page 21, suggest two possible reasons your self-employment insurance would be on Schedule A. You can't deduct payments for medical insurance for any month in which you were eligible to participate in a health plan subsidized by your employer, your spouse's employer, at the end of 2022. 

Also, the deduction can't be more than your earned income from that trade or business.

[A Walsh]

Thanks for the quick reply.  I am aware of those restrictions (income and other coverage), but neither apply to me (I'm a retired CPA, so I know the tax rules well).    Neither apply in this case; the coverage is for the full year and my income is several multiples of the insurance premiums.

One thing I thought of is that I did create a Schedule C in my wife's name for a small amount of free-lance income.  But I did not claim any insurance premiums related to that income, only on my partnership K-1.  Is it possible it's mistakenly applying it to the wrong income?  Maybe I should delete her Schedule C and see what happens?

Andy

[RobertB4444]

It would definitely attempt to apply the insurance premiums to the schedule C.  If your wife had no coverage under your insurance plans then you can zero out that entry under forms mode.  But if she was covered under the plan then a portion of the premiums would be applicable to her self-employment income.

@A Walsh 

[A Walsh]

Thanks for the confirmation.

[A Walsh]

I spoke too soon.  I deleted my wife's small Schedule C and TT still applies the insurance premium related to my K-1 to Medical Expenses (Schedule A) and not as a reduction of income on Schedule 1 (line 17) as is proper.  This definitely looks like a bug to me.

Thoughts?