Taxpayer is a recently-retired Federal employee. Her former employer?s health insurance plan is still available to her in retirement, for which she continues to pay about $2,500 a year.
She is now also doing some self employment consulting. Can the amount she pays for her health insurance from her former employer be reported as self employed health insurance as an adjustment on the 1040? Her self employment income is well above the amount she pays for health insurance.
Pub 535 Chapter 6 would would appear to say no:
"Other coverage. You cannot take the deduction for any month you were eligible to participate in any employer (including your spouse's) subsidized health plan at any time during that month, even if you did not actually participate."
Her "employer" would be the outfit she's working for. She isn't working for her former employer. In my opinion, the answer to the OP's question is, yes.
That should pretty much eliminate the need for Treasury Regs, IRS Rulings, and Tax Court Decisions.
Sorry Bill but paultry is correct. You can't take the SE deduction if you are covered by a current employer or former employer's subsidized plan.
The SEHI deduction. Last year there was also an SE deduction taken on Sch SE.
I would love for you to be right since I'm also in this particular boat. I've even tried to find a way to support it in the Code. I stumbled at section 106. If I'm not an employee in the meaning of this section, why isn't the government's share of my health insurance premium taxable income to me?
Phil Marti VITA/TCE Volunteer Clarksburg, MD
Out of curiosity, do they pay the $2,500 pre-tax or post-tax? I suppose they could take it out of your pre-tax pension, just like an employee with a W-2 has, and then what's left of your pension is taxable.
The statute says the deduction
"shall not apply to any taxpayer for any calendar month for which the taxpayer is eligible to participate in any subsidized health plan maintained by any employer of the taxpayer or of the spouse of, or any dependent, or individual described in subparagraph (D) of paragraph (1) with respect to, the taxpayer."
So the issue is whether the phrase "any employer" means any current employer, or any employer current or past.
___ Stu
After-tax. Current workers pay pre-tax, but retirees pay post-tax.
Phil Marti Federal retiredd
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