Quick Question regarding SE Health Ins

[dmj4]

Client has a Sch C profit and a Sch F loss larger than Sch C profit. I believe I can elect the Sch C for the income deduction of SE Health Ins (on 1040). I understand there will not be an SE form, for that portion of the deduction.

Thanks!

[dyne]

I entered data in my Drake Tax Software using a $10,000 schedule C profit and a
farm loss of $3,000 and an H and A insurance premium of $3,000. The software allowed
the full $3,000 H and A deduction. On schedule SE it showed a business profit of $10,000
reduced by a $3,000 farm loss and reduced by $3,000 of H and A insurance premiums to
result in a $4,000 net SE income. Drake is usually correct.

[Snaggletooth]

Reverse Situation

Dyne, her situation is that there is a net loss because Sch F loss is greater than Sch C income -- exactly opposite of what you entered in Drake.

I don't know why there would be any difference in this situation between deducting the insurance on Sch C directly and deducting it as an adjustment as SEHI. Either way, there won't be any self-employment tax unless the taxpayer elects optional farm treatment.

[oceanlovin'ea]

This is how I entered this situation:

Sch C - 5000 income
Sch F - -8000 loss
SEHI - 1500
My program asks for profits from business with insurance plan established (which I said was 5000)
My program asks for all net profits from profitable businesses (which I entered -3000)

My program allowed the SEHI deduction.

Linda, EA

[dmj4]

Thank you

I appreciate it, everybody!