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You are here: Experts > Business > Corporate Law > Tax Law (Questions About Taxes) > Health Insurance Premiums
Expert: Glenn D Schnabel
Date: 9/6/2008
Subject: Health Insurance Premiums
Question
Hi William,
I am self-employed commercial real estate broker in TN. Pay all of my own expenses including health insurance for me and wife. She is unemployed. What is the guideline regarding deduction of health insurance premiums for self-employed individual? And is it tied to gross receipts or net profit? If I need a worksheet, can you point me? I’ve tried looking on the IRS website and I read that it can be deductible if you have a net profit but it didn’t explain how it’s calculated, if it’s 100%, etc. I’m sure it’s there but I couldn’t find it.
Thanks so much.
Don
Answer
Don,
Thank you for your question.
1)What is the guideline regarding deduction of health insurance premiums for self-employed individual?
According to the IRS web site:
ISSUES:
1.
Where an employer, who is self-employed, provides accident and health
coverage to his spouse as an employee, is the cost of that coverage deductible
by the employer-spouse under section 162 of the Internal Revenue Code.
2.
Where an employer, who is self-employed, provides accident and health
coverage to his spouse as an employee, is the cost of that coverage and medical
reimbursements excludable by the employee under sections 106 and 105(b) of
the Code.
CONCLUSIONS:
1.
The cost of the accident and health coverage is deductible by the employer spouse
if he provides such coverage to his spouse as an employee.
2.
Both the cost of the coverage and the medical reimbursements are excludable
from the gross income of the employee-spouse .
2)And is it tied to gross receipts or net profit?
Your business has to show a net profit.
3)If I need a worksheet, can you point me
Yes. Form 1040 Instructions, page 27 reference line 29
4)but it didn’t explain how it’s calculated, if it’s 100%, etc. I’m sure it’s there but I couldn’t find it.
Its the lesser of the premiums paid in the year or the net profit, whichever is lower. They take 100%
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