Health insurance premiums for self-employed.

[curiousgeorge]

Hello tax experts,
For a self-employed individual, please clarify whether health insurance premiums can be taken as a deduction or can be considered as a business expense. If a deduction, then it does not benefit the self-employed taxpayer, if he does not itemize - right?.
Thanks.

[mwcpa]

George
To the extent that the business has profits a deduction is allowed on the "face" of the return in determine AGI... on the 2010 form 1040 see line 29.... link to IRS form / instructions (IRS.gov) www.irs.gov/pub/irs-pdf/f1040.pdf / www.irs.gov/pub/irs-pdf/i1040.pdf

And, the health insurance is an allowable deduction in computing SE tax link to IRS instructions (IRS.gov) www.irs.gov/pub/irs-pdf/i1040sse.pdf

if the self employed person has no "net income" from self employment then the health insurace is an itemized deduction on schedule A

Health insurance is NOT a deduction in computing net self employment income on line 12 except if the health insurance is an employer paid benefit for employees (w-2 staff)

Example...
a self employed business has net profit before health insurance for the owner of 10,000. Qualified health insurance costs total 12,000.

10,000 is deducted on line 29 of form 1040 and SE tax is zero as their is none... 2,000 is a schedule A deduction....

[curiousgeorge]

Good Morning mwcpa,

You're the best!

Many thanks.