IRS reject on 0 SE income

[JenMO]

Does anyone have any idea if we will be able to efile the returns where the SE health insurance eats up all the Sch C income resulting in 0 SE tax? Right now ATX says IRS will reject, is other software saying this, too?

[spanel]

Does anyone have any idea if we will be able to efile the returns where the SE health insurance eats up all the Sch C income resulting in 0 SE tax? Right now ATX says IRS will reject, is other software saying this, too?

Same thing with Taxwise.. no date.

Chris

[ChEAr$]

And no wonder, too. The SE health insurance deduction itself is limited to net profit!

[ToledoEd]

Drake is letting me file those returns, no reject, but the software shows me a note that thier is a circular calculation in the worksheets, and if the IRS posts a change, they will update the software.

[ChEAr$]

Drake is letting me file those returns, no reject, but the software shows me a note that thier is a circular calculation in the worksheets, and if the IRS posts a change, they will update the software.

The reason is that since there IS no se tax, there IS no schedule se to be filed.

To illustrate, I used my "Sample" return to do the numbers. schedule c has profit of $ 827 and the SEHI is $ 3,400. The SEHI deduction on page one is $ 768 only. Of course the balance of the 3,400 would go to schedule a.

and of course there is no schedule se.

[RitaB]

I was able to get one thru

I was able to get one thru by using long Sch SE. I may also have reduced the amount of health insurance I entered on the SE, too. I don't remember, sorry.

[Rae]

I'm quite sure I had one go through with TaxWise. I'll try to remember who and look it up! I just remember there wasn't enough SE income to take the whole Health Ins deduction and the remainder went to Sch A.

[Rae]

I'm quite sure I had one go through with TaxWise. I'll try to remember who and look it up! I just remember there wasn't enough SE income to take the whole Health Ins deduction and the remainder went to Sch A.

Yes, mine went through fine. I shows that there's no Sch SE in the return.

[Earl]

Had husband and wife in same situation you describe. One had more premiums (including
medicare) than the income so no tax or SE on her SE income. Husband had a little less
premiums than SE income so he did have some income for tax but since it was less than
$400 no SE tax applied.

E-Filed return yesterday. No Schedule SE efiled with return as not required. Received ACK today and accepted.

[DonPriebe]

With a pencil in my hand, I figured it out*

I went through the process with a client who likes to do his taxes manually before coming to see me. According to the IRS worksheet, you first fill out a dummy SE as a worksheet to see what your SE tax would have been if the health insurance deduction was not there. Then you use the C profit less half of the worksheet SE to get the limit on your health insurance adjustment to income. You then redo the SE for real, and (if your insurance cost exceeded your limit) the SE tax turns out to be zero.

But the worksheet is confusing, branching on questions like "Are you subject to the SE tax?" If I am obligated to pay the tax, but the amount is zero, am I subject to it? If a form carries a zero over to the 1040, must the form be included in the filing package?

* From the lyrics of "Seven and a Half Cents" from "The Pajama Game"

[BHoffman]

http://www.youtube.com/watch?v=1w4mVycaC_o

[JG EA]

I watched the whole thing. I did "figure it out" that I have way too much time on my hands this afternoon.