Discussion:SE Health Insurance for Statutory Employee
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Discussion Forum Index --> Advanced Tax Questions --> SE Health Insurance for Statutory Employee
Discussion Forum Index --> Tax Questions --> SE Health Insurance for Statutory Employee
| 28 July 2008 | |
| I have a W-2 statutory employee client. W-2 earnings and expenses reported on Schedule C. $4000.00 net profit reported on schedule C. Tax program does not calculate the SE Health insurance stating their is no SE income. My research on the issue has been unsuccessful. Question: Is a statutory employee eligible for the above-the-line self-employed health insurance deduction? If yes or no, tax code source for this information would be appreciated. | |
| 28 July 2008 | |
| without researching, I thought that only expenses went on the Sch C, not the income | |
| 28 July 2008 | |
| If you are using Lacerte, in wages mark statutory employee and then link to the appropriate Schedule C. See if that works. | |
| 28 July 2008 | |
| The income should be reported on schedule C. Part 1, Line 1 has a box to mark if you are a statutory employee.
If I remember correctly most statutory employees will qualify for se health insurance. I believe that full time life insurance salespersons will not qualify. Don't remember the code. | |
| 29 July 2008 | |
| The taxpayer’s SE health insurance deduction under Internal Revenue Code § 162(l) is limited to the taxpayer’s earned income [as defined in Sec. 401(c)(2)] from the business for which the plan was established (usually the SE income).
In the case of a statutory employee, the 401(c)(2) earnings are computed as though the statutory employee were not a statutory employee. Internal Revenue Code § 401(c)(2)(A)(iii). The short answer to your question is that the software will give you a diagnostic telling you that the taxpayer has insufficient SE income for either a retirement plan deduction or a SE health insurance deduction. You will need to adjust the system calculation of SE earnings. In Lacerte, this is done on Screen 24. Hopefully, someday, Lacerte will make this adjustment automatically. | |
| 29 July 2008 | |
| Riley 2, Additional clarification if you would. By my reading of the code sections you sighted, a full-time life insurance salesman would not be eligible for the se health insurance deduction because they are not included in section 3121(d)(3)(A),(C) or (D) under section 401(c)(2)(A)(iii). Is this correct? CinSee seemed to note this in his/her post above. | |
| 29 July 2008 | |
| Good point. Full-time life insurance salesmen will not qualify. | |
