Preacher and SE health insurance deduction.

[Black Bart]

He gets a W-2 but I'm also doing an SE on it and the housing allowance, weddings and funeral income and so forth, so can't see why he wouldn't qualify (has $3,000 Blue Cross). Agree? Disagree?

[Lion]

Employer Plan?

I don't think he can qualify for SE HI for any month in which he qualifies for an employer plan of his employer or his spouse's. Also, the plan would need to be under his SE company name or his own individual name, so if the $3,000 was his out-of-pocket for his employer's plan, no deduction. Don't prepare many clergy returns, so may be missing something.

[ChEAr$]

Okay, so he's got a W2 for regular ministerial duties at church. This does not go onto a
schedule c. Only added income, weddings, funerals, counseling... etc goes there. Of course it's all subject to se tax as we know.

therefore, any health insurance deduction on page 1 is based only on net profit from schedule c, which will be small indeed, thereby restricting any deduction for health insurance established as a bona fide plan for this "side" business income.

[Black Bart]

Aw shoot,

...therefore, any health insurance deduction on page 1 is based only on net profit from schedule c, which will be small indeed, thereby restricting any deduction...

I forgot about the "net profit" aspect of it and, that's right, it's gonna be small...dang taxes anyway -- there's always a catch.

Thanks Lion -- it's not a company plan, but all his own private policy.

[MAMalody]

Just remember since he is dual-status he is treated as a common law employee for fringe benefits, retirement, etc., therefore he does not qualify for the SE health insurance deduction, period, by matter of definition. While I have not pursued it, I doubt if he will for the honorariums because the IRS considers those when computing the IRC 265 limitation and that may draw them into the above consideration. If you decide to use that Schedule C in the traditional sense for the health insurance, don't forget the IRC 265 limitation because that will increase the profit and health insurance adjustment.

[tpnl]

State Return

Any SEHI not taken on the front page of the 1040 might help on the state return. I know it varies from state to state, but in Ohio the portion not deducted on the front page of 1040 would be a deduction on Ohio.

[Super Mom]

Just My 2 Cents, In The Future, The Preacher May Want To Have The Church Set Up An "accountable Plan" Where His Expense For This Is Included And Making All Of This Non Taxable For Him. Must Be Decided By Church In Biz.

[Black Bart]

In re S E H I

...since he is dual-status he is treated as a common law employee for fringe benefits, retirement, etc., therefore he does not qualify for the SE health insurance deduction, period, by matter of definition...

Thanx for the scientific reason (which is really what I was curious about).

...therefore, any health insurance deduction on page 1 is based only on net profit from schedule c, which will be small indeed, thereby restricting any deduction for health insurance....

Thanx for the practical reason (which, it sounds like, MM has shot out of the water regardless of amount). Not to worry though -- my client, naturally, hasn't the slightest interest in money and is purely concerned about the legal technicalities of the tax code.

Just My 2 Cents, In The Future, The Preacher May Want To Have The Church Set Up An "accountable Plan" Where His Expense For This Is Included And Making All Of This Non Taxable For Him. Must Be Decided By Church In Biz.

Thanx For The Suggestion And I Shall Certainly Speak To The Preach.