Can individual health policy qualify for SE tax deductions?

Yes.

Yes.

Yes. The IRS issued an RR some time ago when it discovered that the strictest literal reading of the requirement ("established under the business") was inconsistent with insurance industry practices.

No. Only insurance for employees counts toward SE tax computation. Think about it: The deduction for the sole proprietor is NOT on Schedule C but on the front of the 1040.

See the RR. I don't recall it's number, but I think it's about 3 years old.

Having been preparing my taxes with TurboTax for a few years now, it always puts the health insurance in the business expenses and therefore makes them deductible in computing the SE tax. To be homest, before seeing your q

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I'm talking about the only-for-2010 deduction on Schedule SE, not a Schedule C business expense.

The only-for-2010 deduction on Schedule SE directly tells you to plug in the amount of the Form 1040 line 29 above-the-line deduction.

-- Rich Carreiro snipped-for-privacy@rlcarr.com

Was it a RR or a CCA? No luck yet finding a RR, but Googling finds many references to Chief Counsel Advice (CCA) 200524001 saying that a plan bought in the name of the individual for a sole prop. will qualify for the above-the-line deduction (whereas if the sole prop was an S-corp it would have to be in the name of the business).

-- Rich Carreiro snipped-for-privacy@rlcarr.com

We are talking sole proprietorship, right?

As a sole propriortorship, you can purchase a medical plan, perhaps under Sec 105, for your employees, but you cannot be one of the policy holders. And a sole propietor cannot be an employee of the business.

It could have been a CCA. It was a while ago.

"A sole prop. as an S-corp.?" ???

Only now have I noticed that. I haven't prepared any returns with Schedule SE and this deduction for 2010 (yet).

This does not seem right. Insurance for your employees, if any, liability insurance for your company goes on Schedule C. But not your own health insurance. It makes a difference. See Schedule SE.

Would have been better phrased as "if the one-person business were an S-corp..."

-- Rich Carreiro snipped-for-privacy@rlcarr.com

SE.http://www.irs.gov/pub/irs-pdf/f1040sse.pdf.  The SE tax is based on> your Schedule C profit before the deduction for your own health> insurance.

The "Plan" your business establishes is to pay all your family's health insurance premiums. That says it all. Put everythinhg on line

2. ed

Here are the direct answers to your query:

1. The IRS has said
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   that that a sole proprietor is the individual so any health insurance in the individual's name is considered to be established under the business. If the individual has more than one business (multiple Schedule Cs), she has to select the business she wants to use for that purpose. The individual can deduct on Line 29 the premiums paid for health insurance for herself, her spouse and her dependents. The deduction can not create a loss. Any premiums that can not be deducted on Line 29, can be used on the Schedule A.
2. For 2010 only, the Line 29 amount is deducted from the net profit of the business before the SE tax is calculated. You can see this by looking at Line 3 of the 1040 Schedule SE where it says "Combine lines

For purposes of the above-the-line health insurance deduction, a greater than 2% shareholder/employee of an S-corp is considered to be self-employed.