Health Care

Health Care

How do health care reform and taxes connect? The Affordable Care Act is single largest change to the tax code in two decades. Find help navigating the complexities of the new health care legislation, Medicare, Medicaid and other medical deductions.

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Esteemed Pioneer
Posts: 15
Registered: ‎09-30-2016

Line 29- Self-Employed Health Insurance Deduction Limitation

I am married and we are both self-employed with our own separate business and separate Medicare health insurance. We each file our own Sched C's. There is a limitation as to the max you can claim as a Health Insurance Deduction which basically says that the deduction can not exceed "net earnings from the business minus 1/2 of the SE tax".

When computing this, MY insurance deductions (premiums paid) exceed the above limit, however, when I combine both incomes and deductions being claimed for both us it is well under the 1/2 SE tax limitation.

 

 MY QUESTION IS .... Can both Sched C incomes and deductions amounts be combined when calculating the deduction or must they be calculated separately before placing the total on Line 29? 

 

Tax Pro
Posts: 5,780
Registered: ‎02-23-2016

Re: Line 29- Self-Employed Health Insurance Deduction Limitation

Hi usaer2,

 

 

Welcome to the H&R Block community.

 

This is a little bit more complicated than simply combining the two incomes, but not by much.  When you have multiple self-employment incomes you have to use the worksheet on page 20 of Publication 535 to figure the deduction.

 

 

If you have any other questions I'll be glad to help.

 

Louis,
Senior Tax Advisor (Tampa, FL)

Esteemed Pioneer
Posts: 15
Registered: ‎09-30-2016

Re: Line 29- Self-Employed Health Insurance Deduction Limitation

My spouse and I had already each completed separate 535 worksheets.  I guess that my question boils down to the last line on that worksheet (Line 14), I was asking if we could combine our premiums paid and net incomes when completing the worksheet. IF we could, we would be able to claim 100% without meeting the limitation because of one or our net incomes being to low.

 

UPDATE....I JUST NOW noticed that on the very top of Worksheet 6-A it states ....."Note: Use a separate worksheet for EACH trade or business......"   NOW I am thinking that I am not allowed to combine our payments and incomes to arrive at the grand total for line 29. ie that it must be computed separately on EACH workheet and then EACH total on the separate worksheets added together for the  grand total on Line 29. IF that is the case, we will not be able to claim all of our premium payments due to one of our incomes being to low to cover the premium deduction amount. 

 

I probably answered my own question.....but do u agree that we must do each worksheet separate and not able to combine incomes and premiums?

 

 

Tax Pro
Posts: 5,780
Registered: ‎02-23-2016

Re: Line 29- Self-Employed Health Insurance Deduction Limitation

Hi usaer2,

 

Yes, you do each have to do a separate worksheet for your respective businesses.  My fault for failing to mention that part.  You will not get to claim 100% of your premium payments.  However, what you can't claim on the self-employment deduction you can claim on Schedule A in the medical expenses section.

 

 

Louis,

Senior Tax Advisor (Tampa, FL)

Esteemed Pioneer
Posts: 15
Registered: ‎09-30-2016

Re: Line 29- Self-Employed Health Insurance Deduction Limitation

Thanks again Louis! 

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Tax Pro
Posts: 5,780
Registered: ‎02-23-2016

Re: Line 29- Self-Employed Health Insurance Deduction Limitation

You're quite welcome.