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Entering self-employed health insurance deductions in ProConnect

by Intuit•1• Updated 3 months ago

What's new for the Self-employed health insurance deduction for tax year 2023:

Starting in tax year 2023 the IRS has released Form 7206 to calculate the Self-employed health insurance deduction for the 1040. In tax years 2022 and prior, the IRS used the Self-employed health insurance deduction worksheet from the 1040 instruction booklet to calculate the allowable deduction on the 1040.

To enter Self Employed Health Insurance Premiums starting in tax year 2023:

If the premiums are from a K-1 S Corporation see Entering self-employed health insurance premiums from S Corporation K-1.

All others:

  1. Go to Input Return ⮕ Deductions ⮕ Adjustments to Income.
  2. From the top of the screen, select Health Insurance.
  3. In the SE Health Insurance (7206) section enter the appropriate amount in Premiums not entered elsewhere (excluding long-term care).

To adjust the SE health insurance deduction starting in tax year 2023:

  1. Go to Input Return ⮕ Deductions ⮕ Adjustments to Income.
  2. From the top of the screen, select Health Insurance.
  3. In the SE Health Insurance (7206) section scroll down to Net Earnings Adjustments.
  4. Use the Net profit of business under which plan is established [Adjust] and Net profit of all business [Adjust] fields to adjust the calculations on the 7206.
  • ProConnect limits this health insurance deduction to the lesser of the total premiums entered, or the net earnings from self-employment minus qualified retirement plans and one-half of the self-employment deduction on Form 1040.  
    • To limit the deduction based on the net income of a single business activity, you must indicate the form and activity name or number.
    • ProConnect carries the limited amount to Form 1040 and carries the total premium entered (less the limited amount) to Schedule A as a medical expense.
  • ProConnect doesn't limit the deduction when Form 2555 or Form 4563 is needed, when income is excluded from sources within Puerto Rico, or when the taxpayer claims a net operating loss deduction; if any of these situations apply, use the adjustment fields.
  • ProConnect doesn't calculate the deduction when the taxpayer has net earnings and gains (other than capital gains) from disposition, transfer, or licensing of property. You must manually adjust the calculation with the adjust fields.

If long-term care plans are established under the taxpayer's or spouse's business, and long-term care premiums were paid for persons other than the taxpayer or spouse, manually limit the premiums paid for the other person(s) based on age, per IRS Pub 525, and include the amount in this input field.

To enter Self Employed Health Insurance Premiums:

If the premiums are from a K-1 S Corporation see Entering self-employed health insurance premiums from S Corporation K-1.

All others:

  1. Go to Input Return.
  2. Select Deductions from the left menu.
  3. Select Adjustments to Income.
  4. Go to the Health Insurance tab.
  5. Locate the field Premiums not entered elsewhere (excluding long-term care).
  6. Enter self-employed health insurance premiums paid that aren't reported elsewhere.
  • ProConnect limits this health insurance deduction to the lesser of the total premiums entered, or the net earnings from self-employment minus qualified retirement plans and one-half of the self-employment deduction on Form 1040.  
    • To limit the deduction based on the net income of a single business activity, you must indicate the form and activity name or number.
    • ProConnect carries the limited amount to Form 1040 and carries the total premium entered (less the limited amount) to Schedule A as a medical expense.
      • To override this calculation, make an entry in SE Health Insurance Deduction [Override].
  • ProConnect doesn't limit the deduction when Form 2555 or Form 4563 is needed, when income is excluded from sources within Puerto Rico, or when the taxpayer claims a net operating loss deduction; if any of these situations apply, use the override input fields.
  • ProConnect doesn't calculate the deduction when the taxpayer has net earnings and gains (other than capital gains) from disposition, transfer, or licensing of property. You must manually calculate the allowable deduction and enter it in the override input field.

If long-term care plans are established under the taxpayer's or spouse's business, and long-term care premiums were paid for persons other than the taxpayer or spouse, manually limit the premiums paid for the other person(s) based on age, per IRS Pub 525, and include the amount in this input field.

  1. Go to Credits in the left menu.
  2. Select Recovery Rebate, EIC, Residential Energy, Oth Credits.
  3. Go to the Health tab.
  4. Enter the amounts in the field Qualified health insurance premiums.
    • If the taxpayer isn't eligible to claim the credit, the premiums will be carried to the self-employed health insurance deduction or Schedule A as a medical expense, whichever is applicable.

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