Tax questions

April 06, 2000

Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions in advance of the April 17 filing deadline.

During 1999 I was self-employed while my spouse was employed full-time for a very small sales representative firm. We paid for health insurance coverage through his company. However, we paid 100 percent of the health insurance premiums; the employer did not subsidize any of the insurance but merely acted as an intermediary.

Given these circumstances, can we still qualify for the self-employed health insurance deduction? We don't meet the percent of AGI for the premiums to be useful as part of itemized deductions. Effective 1/01/00, my spouse became a partner with 4 percent interest in the firm.

Regardless of the answer for 1999, I assume we will qualify for the self-employment insurance deduction (60 percent) for 2000.

Provided the spouse's employer does not subsidize the insurance plan, the premiums would qualify for the 60 percent deduction in 1999. Note: there is an earned income limitation on the 60 percent deduction. For 2000 and 2001, as a partner of the business, the self-employed deductibility limits will continue to apply. The limit is increased to 70 percent in 2002 and then 100 percent deductibility for 2003 and thereafter.

Keith E. Huebel, CPA, Horan & Associates Financial Advisors Ltd.

The above advice is for general purposes only and is not intended as legal, accounting or tax advice. Specific situations may vary.

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