question re self-employed health insurance deduction

Yes you can still take the deduction. How much you deduct depends upon how the employer accounts for the reimbursement. If the $150 per month gets reflected in your 1099-MISC as nonemployee compensation, then you deduct the amount (Over $700/month) you actually paid. If the 1099 does not include the $150/month then you deduct what you paid less what you were reimbursed. Almost always in these situations, the 1099 includes the health payment as compensation.

Not if an employer health plan was an available option. The above post does not state whether or not this is the case.

Declining an employer health plan is not good enough. That's my understanding. It's a frequent circumstance that an employee might decline an employer health plan, and accept some other sort of compensation in return (such as the $150 in this case).

Steve

I assumed the job he was referring to was as a contractor and that he remained a self-employed individual. That's why I said the reimbursement would be on a 1099-MISC and not a W-2.

I leave it to the OP to clarify the ambiguity in his post.

The "job" must refer to being an employee, not an independent contractor. The only kinds of expenses that clients can reimburse self-employed persons for are expenses incurred on behalf of the client or customer, which health insurance clearly is not.

I'm not sure how the employer is "reimbursing" you. Are you saying that after three months, you are eligible to enroll in the employer's group plan and the employer pays the first $150 of premium per month? Or are they simply paying you "extra" taxable wage income to make up for not offering a group plan? Or, do they have a Health Reimbursement Arrangement (HRA), which receives tax-free contributions from the employer that you can use to pay for health care?

If you had the *option* of being covered under your or your spouse's employer group health insurance at any time during the month, no you can't take the SE health insurance deduction for that month, whether you were actually covered or not. I'm not sure if an HRA is a "subsidized health plan maintained by your employer", which would eliminate the SE health insurance deduction.

Other than limited case of travel, car, gift, and entertainment expenses incurred on behalf of the client or customer, there is no such thing as "reimbursement" for an independent contractor. It's all gross income.

-Mark Bole

I think there must be some scope missing from this statement.

A client can make such a payment to a contractor, but the contractor could not claim a corresponding business expense on their Schedule C, and must report the payment as revenue.

Perhaps the client could not claim the payment as a business expense either, depending upon the sense of the contract between client and contractor; but I would think in most cases they could.

Steve

I'm not sure if we're talking here about health insurance, or customer reimbursement of certain business expenses you incurred on their behalf. Maybe we're just quibbling over when it is correct and incorrect to use the word "reimbursement".

Let me put it this way: if I was helping a taxpayer who told me he was self-employed but part of his agreement with his client was to be reimbursed for health insurance, my next question would be, "are you sure you're not really an employee whose employer is trying to incorrectly classify you otherwise?"

Health insurance is a personal expense, and whether the contractor has any, or what it costs, is by definition outside the agreement between them. A successful contractor needs to make enough net profit to pay his personal expenses, rather than bill them to his clients.

-Mark Bole

That ranges into yet another area, whether the person is correctly classified as self-employed. Whether the contractor or the client pays for business expenses is indeed one of the twenty questions. (None of the other 19 questions seem to apply.)

(Well, it has a long history of being a business expense in the U.S.)

I'll agree with that.

In any event, I do not think your scenario is being described in this thread (i.e. the OP is -- I believe -- an employee, not a contractor, of the payor of this healthcare subsidy).

Steve

Yes...that is the inference I started with.

My reply was in response to Alan, who thought an sole proprietor could receive a health insurance "reimbursement" from his client, and yet not properly report it as gross income.

It was this sentence and a half I found confusing, and was trying to clarify:

"How much you deduct depends upon how the employer accounts for the reimbursement. If the $150 per month gets reflected in your 1099-MISC as nonemployee compensation, ..."

-Mark Bole

Mark Bole wrote: [...]

Upon further research, looks like an HRA is a subsidized employer plan (since it represents tax-free income) and therefore cancels the SE health insurance deduction.

-Mark Bole