Self Employed Health Insurance Deduction for 1099-R Income Subject to Self Employment Tax

[Confused39]

As a retired partner, I receive a monthly retirement payment, which is reported to me on a 1099-R by the partnership.  I no longer have any partnership interest and receive no income from the partnership other than the 1099-R payment.  Because I perform some modest post-retirement services for the partnership, my 1099-R retirement payment is considered self employment income that is subject to self-employment tax.  Given my 1099-R income is treated as self employment income which is significantly greater than my health insurance premiums (obtained through the partnership's group health insurance plan at my sole expense), I should be able to deduct those health insurance premiums just as I have done for years prior to retirement.  However, there seems to be no way to do so since TurboTax only allows one to enter health insurance deductions if you have received a K-1 or Schedule C income - which of course is not how the income is reported to me on the 1099-R.  How do I enter the self employed health insurance amount so it is an adjustment to income?  (It should be an adjustment to income since I am "self employed" with respect to the 1099-R income and should not be a Schedule A deduction which is subject to the limits for medical expense deductions.)   Help!!  Thank you very much.

[Vanessa A]

You cannot claim retirement income as self-employment income.  Self-employment income requires you to perform a service or sell a product to get the income.  Retirement income was income already earned based on services already performed. 

So no, you cannot deduct those health insurance premiums like you have before because you cannot treat retirement income as self-employment income.  If you are doing work for the partnership still, even though you are no longer a partner, you should be getting a 1099-NEC.  You would then be able to deduct your insurance payments up to your profit on the 1099-NEC.  

In reality, if you did provide services as a consultant to the partnership in 2021, they do need to issue you a 1099-NEC.  

[Confused39]

Thanks very much, Vanessa.  I really appreciate your quick reply.

I believe the retirement payment is correctly reported to me as 1099-R income as it is paid to me regardless of whether I perform any services for the benefit of the partnership.  But since I do voluntarily perform some services for the benefit of the partnership's business, IRC 1402(a)(10) requires it be considered self employment income subject to self employment tax.  Logically, it would seem that if 1402(a)(10) characterizes the retirement payment as self employment income subject to self employment tax, then the medical insurance premiums that are deducted from the retirement payment should be deductible.  But perhaps consistency is the hobgoblin of small minds and the Code simply is not consistent in this regard?