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If I have an amount on form K-1 (1065) box 13M for health…

If I have an amount...
If I have an amount on form K-1 (1065) box 13M for health insurance. Does that get deducted on form 1040 line 29?From a tax perspective my self employment income is higher by this amount but the amount subject to regular tax is less?
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Answered in 3 minutes by:
3/11/2018
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 14,614
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Hi. My name’s Lane …

I hold a law degree (J.D.), with concentration in Tax Law, Estate law & Corporate law, an MBA in finance, a BBA, and CFP & CRPS (Chartered Retirement Plans Specialist) designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, to clients on three continents, since 1986.

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The actual deduction occurs at the partnership level and is passed to the partner via lower income on the K-1.

If the partnership pays for the health insurance premiums for its partners, it deducts the expense as guaranteed payments and reports the amount to each partner on their respective K-1s as guaranteed payments.

...

The partner then picks up the guaranteed payment as income and reports “self employed health insurance” deduction. The guaranteed payment offsets the self employed health insurance deduction for a net zero effect on taxable income, thus the single deduction described above on the K-1.

...

When a partner pays his (her) own medical insurance premiums, the self-employed medical insurance deduction is allowed if there is self-employment income, and is simply deducted line 29.

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Lets use 10,000 as the premium cost

...

If partnership pays, that's a -10,000 for the partnership, which reduces k-1 income by -10000, which means the axab;e amount comiong through to line 17 on your 1040 will be less, so the net taxable income there is -10,000

...

The guaranteed payment to the partner of course increase the amount on the return by 10,000, thereby increasing taxable income on the return by 10,000 - so a net 10,000 incrrease there

...

But then the 10,000 deduction on line 29 takes you back to a -10,000 tax effect on taxable income.

...

That's the right way to report if partnership pays.

Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 14,614
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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