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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15203
Experience:  15years with H & R Block. Divisional leader, Instructor
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My husband retired in June 2015. He has health insurance

Customer Question

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: 1 year ago.
Category: Tax
Expert:  Robin D. replied 1 year ago.


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.

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Expert:  Robin D. replied 1 year ago.

Now that you have read my answer please respond.