Interesting SE Heath Question

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  • Kram BergGold
    Senior Member
    • Jun 2006
    • 2112

    #1

    Interesting SE Heath Question

    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
    Senior Member
    • Feb 2008
    • 1768

    #2
    I think the plan has to be established under his name or the name of his business.

    Comment

    • FEDUKE404
      Senior Member
      • May 2007
      • 3646

      #3
      Not even close. . .

      Originally posted by 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?
      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

      Comment

      • Burke
        Senior Member
        • Jan 2008
        • 7068

        #4
        Did we ever decide if the Medicare premium for the self-employed taxpayer (not the spouse) is still ok for SEHI?

        Comment

        • ChEAr$
          Senior Member
          • Dec 2005
          • 3872

          #5
          Originally posted by Burke
          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.
          ChEAr$,
          Harlan Lunsford, EA n LA

          Comment

          • Kram BergGold
            Senior Member
            • Jun 2006
            • 2112

            #6
            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.

            Comment

            • FEDUKE404
              Senior Member
              • May 2007
              • 3646

              #7
              Nyet !!

              Originally posted by ChEAr$
              IRS decided it already. Both are deductible.
              LINK --->>> IRS SPEAKS! !!

              Comment

              • Burke
                Senior Member
                • Jan 2008
                • 7068

                #8
                Originally posted by FEDUKE404
                LINK --->>> IRS SPEAKS! !!
                Saw it and printed. THANKS! Self-employed TP can deduct MC, cannot deduct spouse's! And that makes sense.

                Comment

                • FEDUKE404
                  Senior Member
                  • May 2007
                  • 3646

                  #9
                  Just going by the rules

                  Originally posted by Burke
                  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

                  Comment

                  • ChEAr$
                    Senior Member
                    • Dec 2005
                    • 3872

                    #10
                    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.
                    ChEAr$,
                    Harlan Lunsford, EA n LA

                    Comment

                    • FEDUKE404
                      Senior Member
                      • May 2007
                      • 3646

                      #11
                      Not really

                      Originally posted by ChEAr$
                      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

                      Comment

                      • ChEAr$
                        Senior Member
                        • Dec 2005
                        • 3872

                        #12
                        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:



                        Yes, I'll hang my hat on the head lawyer.
                        ChEAr$,
                        Harlan Lunsford, EA n LA

                        Comment

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