The self-employed health insurance deduction (SEHID) can produce meaningful savings, but it is one of the easiest deductions to misapply because eligibility, earned income limits and health coverage facts have to line up. In this session, we’ll walk through a practical approach to getting the self-employed health insurance deduction right for common client profiles, sole proprietors, partners and more complex situations involving S corporation shareholders. We‘ll cover who qualifies, which premiums count, how to calculate the allowable deduction and where to report the deduction on the individual return. We’ll also address two areas that routinely cause errors and client confusion: the required wage and premium reporting mechanics for greater than 2% S corporation shareholders and the interaction between the deduction and the premium tax credit (PTC).
Objectives
Upon completion of this session, you will be able to:
Determine whether a taxpayer qualifies for the SEHID based on the type of activity, coverage and employer plan availability
Identify which insurance costs qualify and which costs do not, including treatment of family coverage and Medicare premiums
Calculate the allowable SEHID
Apply the reporting rules for greater than 2% S corporation shareholders
Evaluate the interaction between the SEHID and the PTC
