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I am helping my daughter do her taxes, and have a question about what deductions are appropriate.

She is on her own, not a dependent anymore but still on my insurance as she's under 26. Her income is a gig-economy mix. i.e. multiple jobs. The W2s are straightforward, but a 1099-NEC opens a can of worms. One job issued this and it represents about 1/4 of her total income. I have limited Schedule C experience, recalling that in the year I filed a Sch C, I was able to take a deduction for my own health care cost.

My question - with a mix of income like this, what is the amount that's allowed to be deducted? I'm thinking some type of pro-rating would be required, but unable to find any guidance. Any independent contractor/ Sch C advice seems to address when that's the only income type. FWIW, when we priced the insurance, we agreed she'd pay for 1/3 the monthly premium and have kept records on this and a few other small expenses this job incurred.

Ben Miller
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JoeTaxpayer
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1 Answers1

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For someone self-employed with a Schedule C business, there is the Self-Employed Health Insurance Deduction (SEHID). This allows you to deduct the amount you pay for health insurance premiums off your taxes, up to the amount of your self-employed income. Publication 535 gives the details.

However, one of the requirements you’ll find in Pub 535 is this:

The insurance plan must be established, or considered to be established, as discussed in the following bullets, under your business.

  • For self-employed individuals filing a Schedule C (Form 1040) or Schedule F (Form 1040), a policy can be either in the name of the business or in the name of the individual.

Because the insurance policy is not established in your daughter’s name or her business, it is not eligible for the SEHID.

You, however, might be able to deduct the insurance premiums on your tax return, depending on your situation, either through itemized deductions, the SEHID (if you have self-employment income of your own), or pre-tax through your employer.

Ben Miller
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