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Lev
Lev, Tax Advisor
Category: Tax
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SOLE PROPRIETOR - HEALTH INSURANCE DEDUCTION OF THE YEAR. My

Customer Question

SOLE PROPRIETOR - HEALTH INSURANCE DEDUCTION FOR PART OF THE YEAR.
My wife became sole proprietor on 15th of September 2015 and had a net income much greater than an amount of health insurance I paid for myself and our daughter in whole year of 2015. Not thought my the employer.
Can we claim this health insurance as "above-the-line" deduction for everything I paid for whole year 2015, or just the part I paid for the time span from 9/15/2015 - 12/31/2015?
Submitted: 9 months ago.
Category: Tax
Expert:  Lev replied 9 months ago.

For the part of the year - specifically for months when you and your spouse were not eligible for the health insurance at work.
It doesn't matter if she had or did not have employment income during these months.

Customer: replied 9 months ago.
I don't get it, let me elaborate:
1. My wife was employee with health insurance from 1/1/2015-8/18/2015. On 9/15/2015 she started as sole proprietor and paid for her health insurance out of her packets
2. Me (husband) - I was employee for whole year of 2015, but I paid for my health insurance from my packet and was not covered by any employer plan
3. My daughter was not covered by my wife neither mine employer plan. We paid for her health insurance.My wife is as a sole proprietor eligible to deduct heath insurance premiums paid for her, her spouse(me) and our daughter and her net income was greater than those premiums (for whole 2015)My question was If we can deduct mine and my daughter health insurance premium for whole year 2015 or just the part paid after 9/15/20156 when she became sole proprietor.
Expert:  Lev replied 9 months ago.

Your wife may deduct health insurance premium starting Sep 2015
She may not deduct health insurance premium for the period from Jan 2015 to Aug 2015 because she was covered with her employer health insurance plan during these months.
When she actually became a sole proprietor is not relevant as long as she was a sole proprietor during the tax year and realized net business income from that activity.

Customer: replied 9 months ago.
My wife's situation was clear to me. What I asked this in the first place is if me and my daughter (not covered under any employer health plan during the whole year) can deduct all health insurance payments from 2015 (entire year) or just the health insurance payments we made between 9/15/2015 - 12/31/2015 (time when my wife was sole proprietor). Thank you
Expert:  Lev replied 9 months ago.

Neither you nor your daughter may deduct health insurance premiums on line 29 - that deduction is ONLY allowed for self-employed persons.

However - neither you nor your daughter were fels-employed during this year.

That deduction is ONLY allowed for your spouse who was self-employed and had ne self-employment income.

You keep asking about the period 9/15/2015 - 12/31/2015 (time when my wife was sole proprietor) - that period is NOT relevant - when she actually became a sole proprietor is not relevant as long as she was a sole proprietor during the tax year and realized net business income from that activity.

See page 33 in instructions

https://www.irs.gov/pub/irs-pdf/i1040gi.pdf

But if you were also eligible to participate in any subsidized health plan maintained by your or your spouse's employer for any month or part of a month in 2015, amounts paid for health insurance coverage for that month can't be used to figure the deduction. Also, if you were eligible for any month or part of a month to participate in any subsidized health plan maintained by the employer of either your dependent or your child who was under age 27 at the end of 2015, do not use amounts paid for coverage for that month to figure the deduction.

"You" in that text is related to your spouse who is self-employed.

That is NOT related to you or your daughter.

Thus - your wife may not deduct health insurance premium for the period from Jan 2015 to Aug 2015 because she was covered with her employer health insurance plan during these months.

That is related to premiums paid for herself and for her spouse and dependents.

So when your wife is eligible for the deduction - that deduction includes premiums paid for her, her spouse and her dependent.

But if she is not eligible - none of premiums are deductible here.

Sorry if you expected differently.

Customer: replied 9 months ago.
Thank you. How about this:(from https://www.irs.gov/pub/irs-pdf/i1040gi.pdf)
Exceptions. Use Pub. 535 instead of the Self-Employed Health Insurance Deduction Worksheet in these instructions to figure your deduction if any of the following applies.
- You had more than one source of income subject to self-employment tax. (APPLIES)Publication 535 (Self-Employed Health Insurance Deduction):
You may be able to deduct the amount you paid for medical and dental insurance and qualified long-term care insurance for yourself, your spouse, and your dependents. The insurance can also cover your child who was under age 27 at the end of 2014, even if the child was not your dependent. A child includes your son, daughter, stepchild, adopted child, or foster child. A foster child is any child placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction.
One of the following statements must be true.
- You were self-employed and had a net profit for the year reported on Schedule C (Form 1040), Profit or Loss From Business; Schedule C-EZ (Form 1040), Net Profit From Business; or Schedule F (Form 1040), Profit or Loss From Farming.
Expert:  Lev replied 9 months ago.

Everything that is correct.
So what is your question?

.

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