I have been self employed with my llc for the past several years and have deducted my health insurance premiums as business expenses. Recently became employed with health benefits but have no llc income for this tax year. Can I prorate my health insurance costs, before new hire benefits kicked in, as business expenses even though I have no income from my llc?

ANSWER

The BIDaWIZ Team's Answer:

We're assuming that your business is setup as a pass through entity since it's an LLC. Generally speaking, eligibility for the self employed health insurance deduction is reviewed on a month to month basis when heathcare coverage is provided by an employer. For the period that you are covered by an employer, you would not be able to deduct the health insurance premiums. The other issue is that there has been no self employment income generated for the business. The self employed health insurance deduction is limited to the business income for the year. Since there was no business income, you cannot elect an adjustment to income on your 1040 for the premiums paid. However, you can claim the health insurance premiums for your business as an itemized deduction on Schedule A (while you're not coverage by an employer). You won't receive the full benefit though because you can only deduct medical expenses that exceed 7.5% of your adjusted gross income.