I am an independent contractor who has worked for a client for many years. The client decided to pay for health insurance for me. However, since I'm not an employee, I couldn't go on their plan. Instead, I pay for the health insurance myself, and they reimburse me each month for the expense.
The problem arises in how to handle this on my taxes. If I count the reimbursement as income and then list the health insurance premiums under "Self-employed health insurance deduction" (form 1040, line 29), then the expense comes off the 1040, but not the Schedule C, resulting in my paying
15% self-employment tax on the amount.On the other hand, I could list it in the Schedule C under "Office Expense" or "Other Expense." But I'm not sure if that's right.
Last, I could just not list it on my income in the first place, but list the amount on the Schedule C that doesn't include the insurance premium reimbursements, since they are, after all, reimbursements, not income. Then I wouldn't have to list the expense anywhere.
Any advice is appreciated. Thanks!
Neil