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Tax Law (Questions About Taxes)/Deducting medical insurance premiums - 1065 vs. 1040



I finished (using a tax program) a business return that generated K-1s for my wife and I (the only partners in an LLC). For each of our K1s, box 1 has an ordinary income figure. Box 4 has "guaranteed payments" in the amount of our shares, pro-rata, of medical insurance premiums paid. Box 13 has that same number as Box 4, listed under "Other deductions". And finally, Box 14 shows self-employment earnings, which equals Box 1 plus Box 4.

Since our personal returns only ask for the Box 1 numbers when figuring our income, it seems like the Business return reflects the deduction of medical premiums paid. (We pay through the LLC)

But on our personal return, when figuring out whether to itemize or take a standard deduction, the program is including the amount of total health insurance premiums paid under "self-employed health insurance premiums" in the medical expenses calculation.

While this would be a welcome deduction, as it's a large amount and would make the difference between itemizing and taking the standard deduction, it does seem like the program is double-counting the medical premiums paid. But I didn't (to my knowledge) enter them on the personal return, so I would think they've been imported from the business return.

I want to check if this is accurate or not????
I asked the "expert" at the software company and they said it seemed Ok, but I wanted to make sure. Can you please help?



If the software is working correctly, and if you entered the data on the proper lines in the business return software, the output would be correct.

What needs to be realized is that the LLC CANNOT deduct your medical insurance premium nor can it deduct other medical expenses for you or your wife. All of those payments must be attributed to you as income (raising your total personal revenue).  So. . .

If it passes the value of that payment to you, so you can pay self employment taxes on it first, then allows you to deduct the actual costs from your net on your personal tax return, it would be doing so correctly.

This is not a benefit to you. This is how the IRS has crafted the accounting for their benefit.

Hope that clears up the question you asked. I imagine it probably also opens a whole new world of questions.

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Richard Fritzler
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Richard Fritzler


Specializing in Business and Corporate taxation. Comparing the advantages and requirements of different business entities, such as Sub-S Corporations, LLC`s, Partnerships (Both Limited and General), Doing Business as a Sole Proprietor, or Using a C-Corporation. Issues regarding K-1 distributions, 1040, schedule C, 1120, 1120s. Are you considering domiciling a Corporation in a low tax state? I can review the benefits and misinformation that exists.


I have been in the business of assisting business owners in reducing their taxes and liability since 1986.

National Small Business Owners Association.
Contributing author to "The Corporate Standard Newsletter".

Contributing author to "The Corporate Standard Newsletter".

I have been in the business of assisting business owners in reducing their taxes and liability since 1986.

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