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health insurance deduction for PA-S-Corp

situation:

new doctor, just licensed to practise in state, not yet employed due to numerous "potential" employer demands for malpractise and incorporation.

have filed for Professional Association, S-Corp with state and expecting to receive final docs in the mail within next 10 days.

have also filed for malpractise insurance(MP) and have accepted a bid from professional association member recommended insurer.

question:

I know the MP is tax deductible but I am still working some part-time jobs which are not in my medical license field (IT/computer related work).

Am I able to declare any of the expenses of incorporation, malpractise premiums and personal health insurance premiums against my income for 2009, if I do not secure a job in my direct field of medical license this year?

It is quite possible that I will end up working part-time in my IT/computer temp jobs without getting a "real" job offer (every recruiter and personnel type demanded I am incorporated and that I have my own MP insurance) until end of year 2009.

Does that mean that my S-Corp filing fees, premium for MP and Personal Health Insurance are non-deductible this year if I don't get a medical field related paycheck ?

If I do get a medical field job this year, I know for a fact that the S-Corp and MP premium is tax deductible but is my Personal Health also deductible as business expense?

Reply to
jake
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"jake" wrote

Just to note: You make an "S" election with the IRS. The Secretary of State (where you incorporated) is not able to grant you "S" status.

I would hope that you find a competent tax accountant, CPA or EA, in your area for advice, as you'll need it now and as things progress over the years. Being in business, which is where you're headed, sometimes means the tax and accounting isn't always a DIY job on top of doing your job of running the business and providing services to your patients.

The incorporation fees and other costs are deductible, as I see it, as start-up costs ratably over 15 years, although there is an option to deduct up-to the first $5,000 in year 1. Those would be taken by the company on the company tax return.

The big question is, when is your "Year 1" going to be? And that's one of the things the CPA or EA can help you determine. Are you in business, or still starting your business. Big question with lasting implications.

Medical insurance isn't deductible by the company, but would be taken on the face of your personal return. That would be when you have a business up and running. Which might be this year, might not. Otherwise, the health insurance falls to Schedule A. It's also an "employee" deduction type item, in that you should have an employee - even if that's you - before the company pays health benefits.

It sounds to me that you're trying to win the horse race before you get the horse saddled up. Your first focus should be on getting the company established, then get the business established (that's different from the entity formation), establish yourself as an employee, then worry about employee benefits.

Reply to
paulthomascpa

Yes. The income and expenses for your S Corp are entered on form 1120 and then on Schedule K-1. On your personal tax return, you copy the profit from your K-1 (which will be a loss if there are only expenses) onto page 2 of your Schedule E. If the amount is positive, it is entered on page 1 of form 1040, line 17. If the amount is negative, is can only be entered on line 17 if you had active participation in the S Corp, which is obviously the case here. This way, your expenses for the medical LLC deduct against the wage income from your odd jobs on line 7.

Reply to
removeps-groups

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