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Health Insurance Premium deduction for Husband/Wife LLC

Personal Finance & Money Asked by tmwn6919 on May 22, 2021

Assume the following situation:

My wife and I own a LLC in a community property state. (50/50)
We are self-employed and have no employees.
Under this arrangrement, business income flows through to personal return.

Let’s assume, my wife and I each generate $12000 in profits through self-employed work (freelancer) under the LLC umbrella, for a total of $24000.
We have health insurance through an exchange plan.
The plan is in my name.
Health insurance costs are $24000 annually.

I know that I can deduct health insurance premia up to the profits from my business.

But, what is the right number here for business profits: $12000 (what I contributed through my work to profits from our jointly owned businss) or $24000 (profits from both me and my wife operating through the LLC).

Thanks!

One Answer

See Worksheet 6-A: Self-Employed Health Insurance Deduction Worksheet in Publication 535: Business Expenses. On lines 4-6 it takes into account multiple Schedule C's, but the health insurance plan being established under only one of them.

Correct answer by Craig W on May 22, 2021

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