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The Farm CPA

RSS By: Paul Neiffer, Top Producer

Paul is now part of the fourth generation in America that is involved in farming and hopes the next generation will be involved also. Through his blog he provides analysis and insight to farmer tax questions.

Where Do We Deduct Our Health Insurance Premiums?!

Dec 26, 2010

One of our readers asked the following question:

"Self employed health insurance deductions: does is apply to schedule F, schedule 1040 or both? Will I be able to deduct my health insurance on both my 1040 AND my schedule F or will I have an option of either schedule, or is it schedule F only for 2010."

The Small Business Jobs Act of 2010 added a new provision for 2010 allowing the cost of health insurance premiums for farmers and other self-employed persons to be deducted against self-employment tax.  However,the Act did not change how the health insurance premiums are deducted for regular income tax purposes.  I have reviewed the instructions for Schedule F and they state that these health insurance premiums are still deducted on page 1 of form 1040 on line 29.

However, I have not seen the new schedule SE which is where I believe the actual deduction on line 29 of form 1040 will flow through as a deduction to offset your SE tax.

Therefore, to answer the question, the actual health insurance premium allowed as deduction will be recorded on line 29 of form 1040, but not on schedule F or C, etc.  Any allowed deduction should then flow to the schedule SE to be allowed as a deduction against SE tax.  You will only report the deduction once against actual taxable income.  You will not be allowed to claim the premiums twice as a deduction and they do not go on Schedule F.

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