In: Accounting
Terrell, a self-employed architect who reported a net profit on his Schedule C, paid for his health insurance out of his own pocket. He was not eligible to be covered under any other insurance plan until November 1, when he became eligible for, but opted out of, his spouse's employer-sponsored plan. His total premiums paid for the year were $4,600. How much can Terrell deduct as an adjustment to income on his tax return? |
$767 |
|
$2,300 |
|
$3,833 |
|
$4,600 |
ANSWER:- $ 3833
EXPLANATION :- As per US tax laws a self employed person can take 100% deduction of health insurance he paid for self, his spouse or his dependent child. But at the same time he or his spouse should not eligible for any other health insurance plan sponsored by the spouse employer. So the amount that can be deducted is only upto the months the person is not eligible under the insurance scheme sponsored by his spouse's employer.
Therefore amount of deduction eligible is only for 10 months period from January to October i.e 10 months.
Health insurance deduction = ($ 4,600÷12)×10 = $ 3,833