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My husband retired in June 2015. He has health insurance…

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My husband retired in June...
My husband retired in June 2015. He has health insurance through his former non-governmental employer and the premium is deducted directly from his pension payment. In July 2015 he started his own business and he had a net profit of $20,000 for 2015. Can we deduct the $3,600 in premiums we paid as a business expense? I've read Publication 535 and it does not specifically address this issue.
Submitted: 2 years ago.Category: Tax
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2/23/2016
Tax Professional: Robin D., Senior Tax Advisor 4 replied 2 years ago
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 18,352
Experience: 15years with H & R Block. Divisional leader, Instructor
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Hello

In the case of a retiree, the former employer cannot reduce the pension to give them a tax-free benefit under a cafeteria plan like an employee receives.

As your husband does not have this premium deducted pre-taxed then it is allowed for a medical expense when itemizing, Schedule A.

To be a business expense, the insurance plan must be established, or considered to be established under your business. This is not the case as the previous business when he was an employee has established the plan.

You can use them on Schedule A should you itemize but not against the business.

Please remember to rate my service excellent once you have all the information you need. If you have any other questions, please ask me – I’ll be happy to respond. Thank you!

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Tax Professional: Robin D., Senior Tax Advisor 4 replied 2 years ago

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