[cpa1982]

OK here’s a situation. There is this married couple trying to file their 2015 tax return. Husband is over 65 and retired. Wife is getting health insurance thru her employer and paid portion of Health insurance premium. This is most common situation these days since most companies don’t cover 100% premium. He wants to take standard deduction plus deduct portion of his wife’s health insurance premiums. I told him you can either itemize or take standard deduction but he refused to listen. Is there any situation where IRS allows you to take standard deduction plus allows you to deduct health insurance premiums paid by you (exclude business)?

[Anonymous]

As per my knowledge, she can deduct the insurance premium only if that is included in w2.

[Missy]

No he can't do that. Further, her box 1 amount on her W-2 is likely already reduced by the amount she paid for her share of he premiums. There are a few exceptions but most companies have the employee portion of insurance premiums taken from pre tax earnings.Basically if her box 1 income is reduced by the insurance premiums, 401k contributions, FICA , she already is getting the deduction for the premiums.

Licensed Massachusetts Non Reporting CPA since 2012
Finance/Admin/HR Manager

[cpa1982]

Ano,

Thanks for the reply! In her W-2 form it doesn't show anywhere says her health insurance premium paid by her.

[Anonymous]

unless she is an S-corp >2% shareholder with Box 14 of her W-2 showing the health insurance, it cannot be deducted on the front page. barring any self employment issues, that leaves only one option- Sch A subject to the 7.5% floor. tell the old man no dice.

[Tncincy]

Standard deduction is used if itemized deductions does not exceed the standard deduction. There is no way to take both. Pre-taxed premiums cannot be deducted again since they are before tax payments.

It begins with a 75
Been here too long as a cheerleader....ready to pass

[cpa1982]

mla11692,

I tried to explained to him what you just said but he refused to listen. He is not understanding that it was taken out before pre-tax earnings.

[Missy]

I would recommend he find someone else to do his taxes. Clearly he will not be satisfied by the correct explanation.

Licensed Massachusetts Non Reporting CPA since 2012
Finance/Admin/HR Manager

[cpa1982]

eesti,

That old man is so stubborn, he never gives up easily. I exit the program, gave his file back and said he needs to either research on his own or go to CPA firm to confirm it. This is main reason why doing 1040 is no fun.

[Anonymous]

theres nothing wrong with him wanting to take the insurance premiums they paid out of pocket. those may not be included on the w-2. those you will have to get from the taxpayer. for example, supplemental dental/vision/prescription plans. but those have to go on Sch A, not front page.

sounds like the guy is questioning your authority. that sucks man. i probably wouldnt have the patience. but then again you dont want to tell him off and lose a client. but in my experience thsope are more headaches than theyre worth. if theyre one of these people paying you $200 for a simple 1040 send them packing! not worth it

[Tncincy]

We come across so many that know more than us (professionals) but need our help…..take the standard deduction if the itemized deductions does not exceed the standard. The benefit is to take the greater of the two, but there is a list of deductible medical expenses, the main thing is the 10% agi threshold. But no you can't do BOTH.

It begins with a 75
Been here too long as a cheerleader....ready to pass

[cpa1982]

eesti,

I tried almost an hour to explain to him the situation but he refused to listen. Then I lost my patience, log off from program and gave his file back.

[Missy]

I am going to go on a limb and guess this is a relative or friend of yours. This is why I dont do taxes for family, they think you're a magician not an accountant.

Its pretty quick and easy to figure out if the insurance was paid with pre tax dollars lol. Ask him what his wife makes per year without looking at the W-2. If he says she makes $50k, but her box 1 amount is $45k, you can pretty easily reconcile her gross salary is $50 minus $4k in insurance premiums, minus FICA of $1k as an example. It is possible if you know all the inputs to reconcile a W-2 to payroll.

Licensed Massachusetts Non Reporting CPA since 2012
Finance/Admin/HR Manager

[cpa1982]

mla11692,

“I am going to go on a limb and guess this is a relative or friend of yours. This is why I dont do taxes for family, they think you're a magician not an accountant.”

You are right. I know him for few years. This year they made more money than last year and their federal tax payment went up, i guess he didn't like it and wanted me to do some magic so he can get refund. lol.

[Author]

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