S.E. H.I. Deduction

[JG EA]

I have a question that I need help figuring out.

A married couple have 2 separate Schedule C businesses. One is a business that they share and the other is the wife's alone.

The one they share is zero this year (a carryover of OIH brought it down to zero). The wife's is a net profit.

For their family Health Insurance do I need to split the amount between the two businesses, even though it won't help on the zero one?

Or can I put it all on the wife's?

[Kram BergGold]

Se Hi

The question is, who is the insured? If the wife then you are good to go up to the profit from her business. If it is the husband you are not allowed a SE HI deduction. The insured is the person listed first on the policy. You might be able to determine this by looking at their health insurance cards. Most cards have suffixes. The lowest suffix is the insured.

[JG EA]

Thank you. However, it is a family policy. Husband, wife, etc.

Are you saying that it really belongs to only one person?

It says in Pub 535 "... deduct premiums paid for medical ....for yourself, your spouse, and your dependents."

Additional info: they are in a community property state.

[S T]

Most Health Plans

Have the Insured, then spouse and then dependents

Do you know what name the med insurance is issued???

Sandy

[Gary2]

Being in a community property state makes things more interesting. If they were filing separate returns, each separate return would have two schedule Cs (but the Schedule SE would use effectively numbers as if they were in a separate property state).

However, I don't know how the Schedule Cs are prepared for a joint return. Assuming that they don't have any legal agreement that would let them treat the wife's return as separate income, wouldn't that mean that it was half the husband's for income tax purposes? Do they have to file four schedule Cs (two for each business), the way they would for filing separate returns? And does that change things as far as the health insurance deduction is concerned? I don't know - but perhaps someone else could comment specifically about the community property aspect.

[Kram BergGold]

Family policy

One spouse is the insured. The spouse and children are then covered under the insured's insurance. As far as I know this is alwasys the way it is. Think o fan employee. The employee gets health insurance for themself and the rest of the family. The employee is the insured. The family is covered under the same policy.

[JG EA]

Thanks. The husband is the policy holder. I'm looking into the community property angle on HI now.

Did you know you don't need two Schedule C's (for the one business) in a community property state? I know this from some research which I am now trying to find again to tell you all where it is. I don't know if that will make any difference in this deduction, but it'll be worth checking out.