health insurance premiums
I am self employed and have net profit from consulting work. I would
like to take the health insurance premium deduction, but the policy
is under my husband's name. He works on W-2, but he did not get
the insurance from his employer, so we took the individual insurance.
My question is, can I take this deduction since we are filing jointly
even though the policy is under my spouse's name and we paid it
from our pocket? Thanks in advance.
Self-employed individuals can claim, as a deduction to adjusted
gross income, the amount paid for health insurance premiums for
themselves, their spouse and dependents for a plan established under
that business. No deduction is allowed for costs during a month
in which the taxpayer is eligible to participate in any subsidized
health plan maintained by any employer of the taxpayer or of the
spouse of the taxpayer. Based on the letter of the law, you have
two obstacles to overcome:
- The plan has to be established under your business.
- You cannot be eligible to participate in a subsidized plan.
In ILM 200524001, the IRS held that a sole proprietor
who purchases health insurance in his or her own name has established
a plan under his or her business and can, therefore, claim a deduction
for self-employed health insurance. In your case, your husband purchased
the policy, and you say it is in his name. While this differs from
the facts in the internal legal memorandum, it would seem that since
the policy covers both of you that this is not a significant detriment
to its deductibility.
The other question is whether your husband is eligible
to participate in a subsidized plan. To see if you're eligible to
claim the self-employed health insurance deduction, you have to
determine if your husband's employer contributes to the cost of
the insurance it offers, if any. If so, then you would not be eligible
for the deduction.