Today TaxMama® hears from Debra in the TaxQuips Forum with this common issue. “I work part-time as a bookkeeper for various clients after my full-time job. I report this income on Schedule C. My husband is retired and pays for his own individual medical plan, himself. We file as married jointly. Do his insurance premiums qualify as a deduction on Form 1040, line 29 for 2011, the self-employed health insurance line? That line says it’s for you, your spouse, and your dependents?”
Alas, in order to be able to deduct your husband’s insurance, your company must have a written medical plan, and the company must be paying for the insurance. And he must be working for the company. In fact, even to deduct your own insurance (if you were paying for it), the company should have a written medical plan.
You won’t be able to do it for last year, but you still have time to set this up for this year – for 2012.
Since your husband is retired, it’s time to have him start working for you. If he can legitimately do work for your business, you can hire him and put him on payroll.
You can give him medical and health care coverage for his whole family. That means – your business will be able to claim the deduction, on Schedule C – for his health insurance as well as all out of pocket medical costs for both of you.
You can create the plan yourself and follow the rules for IRC Section 105 plans. Or you can use something already created and administered by experts who have been doing it for decades. Years ago, I learned about the Agri-Biz Plan folks. They do a terrific job with setting up and administering these plans for you. In fact, once you get familiar with it, you can recommend it to your clients, too.
And remember, you can find answers to all kinds of questions about self-employed health insurance and other tax issues, free. Where? Where else? At www.TaxMama.com.[Note: If you were subscribed to the e-mailed version of TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]
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