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K94
New Member

Healthcare Premium Deduction Sole Proprietor

I am a sole proprietor and my spouse is a W2 employee. Although his job offers healthcare plans, they don't disqualify him from getting a healthcare.gov plan.

 

He signed us up for a healthcare.gov plan and paid the first month's premium.

 

Will I be able to take the healthcare premium deduction this year? Do I have to be primary on the plan (currently, he is primary)? Can I take the full amount or only my half?

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2 Replies
rjs
Level 15
Level 15

Healthcare Premium Deduction Sole Proprietor

When you say "the healthcare premium deduction" I assume you are talking about the self-employed health insurance deduction, not an itemized deduction for medical expenses on Schedule A. I see at least two reasons that you will not be able to claim the self-employed health insurance deduction.


The policy has to be either in your name or the name of your business. A policy in your spouse's name, from healthcare.gov or anywhere else, apparently does not qualify for the deduction.


The other problem is that "You can't take the deduction for any month you were eligible to participate in any employer (including your spouse's) subsidized health plan at any time during that month, even if you didn't actually participate." [IRS Publication 535, page 23] It seems that you were eligible to get insurance from your spouse's employer, but you chose not to. Almost all employer-provided insurance plans are subsidized by the employer. Since you were eligible to participate in an insurance plan subsidized by your spouse's employer, you cannot claim the self-employed health insurance deduction.

 

You can, of course, include any health insurance premiums that you pay in your medical expenses on Schedule A if you itemize deductions. That includes the net amount that you or your spouse paid for the healthcare.gov coverage, but not including any part of the premium that was covered by the premium tax credit. The deduction for medical expenses is reduced by 7.5% of your AGI, and your total itemized deductions have to be more than your standard deduction to get any tax benefit from the medical expense deduction.

 

Healthcare Premium Deduction Sole Proprietor

@K94 simply, if the employer offers insurance to you and you turn down the option, that disqualifies you from the SEHI deduction.   You can deduct the premiums on Schedule A if you itemize. 

 

it's that simple

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