[Summit] Warning- tax consequences of Obamacare subsidies for the self employed

Breslers breslerfamily at gmail.com
Thu Jan 8 12:47:55 CST 2015


2014 1040 instructions just published & what I suspected appears true- one
can NOT take the line 29 deduction of health insurance costs for the self
employed AND receive an "Obamacare subsidy/discounted insurance rates.
To take the 1040 self employment deduction, your insurance MUST be
purchased by your business entity/sole proprietorship [see info in 1040
booklet, pg 31] and while businesses CAN purchase from the Obamacare
“marketplaces”, businesses do NOT qualify for cost subsidies.

For SELF EMPLOYED folks - this is VERY IMPORTANT financially

Unfortunately, for many looking forward to lowering their insurance
costs w Obamacare
subsidies,  the tax deduction would be the better choice, but I doubt any
retroactive changes are possible for health insurance already purchased as
an individual insurance to be Obamacare eligible.
It may also be too late to change 2015 choices?

Sadly, if this is a surprise, lacking that line 29 deduction, which results
in one's taxable income being increased by the entire amount of the
no-longer-deductible health insurance, the surprise could include
discovering your income is now too high to qualify for an Obamacare subsidy
at all.

There was no information available about this situation at the times folks
had to make their choices; I asked & asked & asked, even the IRS. &
this despite
the following facts.

"Sole proprietorships make up, by far, the largest number of small
businesses in the United States; totaling an estimated 23 million entities
in 2013.
By far, the most important tax expenditure for sole proprietorships for
2013 is the deduction for self-employed health insurance and long-term care
insurance premiums totaling approximately $1.9 billion."

from a report  "Expenditures Used by Small Business" (from
http://www.sba.gov/sites/default/files/rs415tot.pdf )
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