[Anonymous]

Regarding Partner’s Health Insurance premium, Is it reported to Form 1065? According to Becker Text R4-15, it should be reported in Form 1065, Schedule K, and Sch K-1. However, Becker Simulation does not specify to report to Form 1065…

I asked Becker said that health insurance is sometimes deducted from ordinary income on 1065 and then reported as a guaranteed payment. hence, they mention this in book. however, it is not the most common treatment. Instead, the common treatment is that it should appear in Schedule K…

I am very confused… What do I have to concern if i see this similar question in real exam???

Please advise.. Thank you.

[Anonymous]

Health insurance premiums are considered a guaranteed payment to a partner, therefore will appear as an expense on the 1065.

Guaranteed payments flow through to the K-1 as income to that particular partner. If partnership made a profit then the health insurance payments are also deducted on the Schedule K-1 (cancels out income to partner). However, if partnership had a loss for the year then the deduction on the K-1 is not allowed but the partner can include the health insurance amount as a Schedule A medical exp.

I hope this makes sense…..

[Theo]

Here's an explanation with examples which I found useful.

https://www.politoeppich.com/article_pdfs/9-Partnership%20and%20S%20Corporation%20Health%20Insurance%20Premiums%20LH.pdf

AUD 01/17/2013 (92)
REG 02/28/2013 (85)
FAR 04/26/2013 (85)
BEC 05/30/2013 (88)

[Anonymous]

Thanks, dont5253 and Theo!!

[Noct]

Regardless of whether the company has a profit or a loss, partners' health insurance is treated as a guaranteed payment except it's reported on it's own line on the k-1. The partner recognizes income from it, but can offset that income with the SE health insurance deduction on page 1, not sch A. The page 1 deduction is much better than sch A because it reduces AGI which affects phase-outs, it is deductible even if the partner is not itemizing, it reduces SE tax, and it isn't subject to the 7.5% floor that sch A medical expenses are.

FAR - 79 - 07/2012
AUD - 65, 78 - 11/2012
BEC - 76 - 11/2012
REG - 78 - 01/2013
ETH - 98 - 01/2013

Material: Wiley books

[Author]

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