Interesting SE Heath Question

[Kram BergGold]

Taxpayer is employed and self employed in Jan and Feb with health insurance through his employer. The employer does not cover his spouse so he covers her under his employer sponsered plan for $803 per month. Starting March 1 he is laid off and goes on Cobra and continues to operate his sole proprietorship. The Cobra policy shows that his spouses coverage stikll costs $803. This says to me that her premium in Jan and Feb was not subsidized, so it is eligible for his SE health deduction. What do you think?

[BHoffman]

I think the plan has to be established under his name or the name of his business.

http://www.irs.gov/publications/p535/ch06.html#en_US_2012_publink1000208843

[FEDUKE404]

Not even close. . .

Taxpayer is employed and self employed in Jan and Feb with health insurance through his employer. The employer does not cover his spouse so he covers her under his employer sponsered plan for $803 per month. Starting March 1 he is laid off and goes on Cobra and continues to operate his sole proprietorship. The Cobra policy shows that his spouses coverage stikll costs $803. This says to me that her premium in Jan and Feb was not subsidized, so it is eligible for his SE health deduction. What do you think?

The answer is above.

Self-employed person is covered by employer insurance, therefore by the long-standing rules of SEHI during such time he is ineligible to deduct anything. (Same would also apply if he was, or could have been, covered by his wife's employer.)

The important issue is not the extra cost of his wife's/dependent's coverage, but his coverage. It is my understanding that COBRA essentially allows a (former) employee to continue the "same" insurance he had while employed, except the employer no longer pays any portion of it.

If I read your post correctly, this guy is somehow trying to deduct as SEHI the (extra) cost of covering his spouse while he was simultaneously being provided employee insurance? Ah...no!

FE

[Burke]

Did we ever decide if the Medicare premium for the self-employed taxpayer (not the spouse) is still ok for SEHI?

[ChEAr$]

Did we ever decide if the Medicare premium for the self-employed taxpayer (not the spouse) is still ok for SEHI?

IRS decided it already. Both are deductible.

[Kram BergGold]

Now i get it

Even though the spouses premiums were not subsidized when the taxpayer was employed, his premiums were totally paid by the company. Since she was covered by his policy the taint of subsidy covers both of them. So her $800 premiums for two months are a Schedule A deduction.

[FEDUKE404]

Nyet !!

IRS decided it already. Both are deductible.

LINK --->>> IRS SPEAKS! !!

[Burke]

LINK --->>> IRS SPEAKS! !!

Saw it and printed. THANKS! Self-employed TP can deduct MC, cannot deduct spouse's! And that makes sense.

[FEDUKE404]

Just going by the rules

Saw it and printed. THANKS! Self-employed TP can deduct MC, cannot deduct spouse's! And that makes sense.

You are more than welcome.

(And that is kinda what I said all along was the IRS intent for SEHI, although I got slammed here for saying such. . . . . .)

FE

[ChEAr$]

IRS memo re medicare parts b, c, d for self employed and spouses and dependents

Here is the reference to the IRS memo I remember:

http://www.crainscleveland.com/artic...&Profile=1076#

Medicare for spouses and dependents are covered.

[FEDUKE404]

Not really

Here is the reference to the IRS memo I remember:

http://www.crainscleveland.com/artic...&Profile=1076#

Medicare for spouses and dependents are covered.

That memo is old news (and your web site for Crain's Cleveland Business is blocked to non-subscribers).

But you are more than welcome to hang your professional hat on it!!

Suggest you visit:
http://forum.thetaxbook.com/showthre...as-now-spoken-!!

FE

[ChEAr$]

The link didn't seem to make it in my last post. I read it and thought that by linking it here, we could read it; instead I see reference now to subscriber only. Sorry.

So here's the IRS chief counsel memo:

http://www.irs.gov/pub/irs-wd/1228037.pdf

Yes, I'll hang my hat on the head lawyer.