My husband just started working at a practice where they pay him as an independent contractor in Anesthesiology. However, they are also paying his Health Insurance premioums every month which will be included in his taxable income on a 1099. Will he be able to deduct these premiums as a self employed health insurnce deduction on page one of the 1040 since he is filing a schedule C as Self-employed? If not, can he deduct it as an expense on schedule A under medical expenses?

Thanks

Zip Code: JCUTTING1@TAMPABAY.RR.COM

Hi Judy. Self employed individuals may deduct from gross income (as an "above the line" deduction) 100% of amounts paid during the year for health insurance for themselves, spouses and dependents. This deduction is limited to the net income derived from the business, less the deduction for 1/2 of the self employment tax and any deduction for a SEP, Keogh, etc ("adjusted self employment income").

Because the premiums paid by the practice are included as additional income on his 1099, it is the same as the practice paying your husband and him paying the premiums personally. Therefore, these premiums would be deductible as an adjustment for AGI (on page 1), assming his "adjusted" net income (as described above) exceeds the premiums paid.

Please let me know if you have any additional questions.

Harry

Zip Code: harry@hrwcpa.com

Thank-you for your response. Very helpful! But I have looked on the instructions on form 1040 and it said the Self-Employed Health Insurance payments have to be under a plan "established" under your business. Would he qualify under this stipulation?

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Replying to:

Hi Judy. Self employed individuals may deduct from gross income (as an "above the line" deduction) 100% of amounts paid during the year for health insurance for themselves, spouses and dependents. This deduction is limited to the net income derived from the business, less the deduction for 1/2 of the self employment tax and any deduction for a SEP, Keogh, etc ("adjusted self employment income").

Because the premiums paid by the practice are included as additional income on his 1099, it is the same as the practice paying your husband and him paying the premiums personally. Therefore, these premiums would be deductible as an adjustment for AGI (on page 1), assming his "adjusted" net income (as described above) exceeds the premiums paid.

Please let me know if you have any additional questions.

Harry

Zip Code: JCUTTING1@TAMPABAY.RR.COM

I think the IRS is directing this rule toward people who are self-employed, but have access to health insurance through another job, or through their spouse's job.

If that's the case, the IRS doesn't want you to include the employee portion of health insurance premiums obtained through another employer as self-employed health insurance premiums.

I agree with Harry that since they are including the health insurance premiums in your husband's 1099, it's as if he's purchasing the health insurance on his own. And you should be able to claim them as an adjustment to income on your tax return.

Zip Code: cpa@mdtaxes.com