Can Cobra be a Business Expense ?

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Subject Author Date Can Cobra be a Business Expense ? Gary 04-07-2009  Re: Can Cobra be a Business Expense ? Paul Thomas, CPA 04-07-2009  Re: Can Cobra be a Business Expense ? Stuart A. Bronstein 04-07-2009  Re: Can Cobra be a Business Expense ? CMS, VA CPA 04-07-2009  Re: Can Cobra be a Business Expense ? Stuart A. Bronstein 04-07-2009  Re: Can Cobra be a Business Expense ? Alan 04-08-2009  Re: Can Cobra be a Business Expense ? removeps-groups@yahoo.com 04-17-2009  Re: Can Cobra be a Business Expense ? Alan 04-22-2009   Re: Can Cobra be a Business Expense ? Steve Pope 04-07-2009  Re: Can Cobra be a Business Expense ? ed 04-08-2009
Posted by Gary on April 7, 2009, 3:14 pm Please log in for more thread options I had 2 jobs, one was a consulting gig and the other was a job with benefits. I quit my full time job with benefits to work for another companys, but needed to wait 60days for the health insurance benefits to kick in, can I claim my Cobra payments against as a business expense ? -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Paul Thomas, CPA on April 7, 2009, 3:23 pm Please log in for more thread options >I had 2 jobs, one was a consulting gig and the other was a job with > benefits. I quit my full time job with benefits to work for another > companys, but needed to wait 60days for the health insurance benefits > to kick in, can I claim my Cobra payments against as a business > expense ? Nope. They are a medical expense, rightfully deducted on Schedule A if, when combined with all other qualified medical expenses, they exceed 7.5% of your AGI. -- Paul Thomas, CPA Watkinsville, Georgia -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Stuart A. Bronstein on April 7, 2009, 4:44 pm Please log in for more thread options >> I had 2 jobs, one was a consulting gig and the other was a job >> with benefits. I quit my full time job with benefits to work for >> another companys, but needed to wait 60days for the health >> insurance benefits to kick in, can I claim my Cobra payments >> against as a business expense ? > > Nope. They are a medical expense, rightfully deducted on Schedule > A if, when combined with all other qualified medical expenses, > they exceed 7.5% of your AGI. If his "other job" is as an independent contractor and he files a Schedule C, he should be able to deduct some of it on there. Stu -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by CMS, VA CPA on April 7, 2009, 6:25 pm Please log in for more thread options > >>> I had 2 jobs, one was a consulting gig and the other was a job >>> with benefits. I quit my full time job with benefits to work for >>> another companys, but needed to wait 60days for the health >>> insurance benefits to kick in, can I claim my Cobra payments >>> against as a business expense ? >> >> Nope. They are a medical expense, rightfully deducted on Schedule >> A if, when combined with all other qualified medical expenses, >> they exceed 7.5% of your AGI. > > If his "other job" is as an independent contractor and he files a > Schedule C, he should be able to deduct some of it on there. > > Stu > No, he cannot. Health insurance for the self-employed is not deducted on Schedule C. The cost of premiums goes on Line 29 of the 1040 if they meet the criteria. In this case they don't---- per 1040 line 29 instructions "do not include amounts for any month you were eligible to participate in an employer-sponsored health plan " Cobra is an employer sponsored plan. Paul is correct, it goes on Schedule A. -- Charles M. Shanes, CPA Richmond, VA QuickBooks ProAdvisor www.shanescpa.com cshanes@-Delete-This-Nospam-shanescpa.com -- Charles M. Shanes, CPA Richmond, VA QuickBooks ProAdvisor www.shanescpa.com cshanes@-Delete-This-Nospam-shanescpa.com -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Stuart A. Bronstein on April 7, 2009, 7:43 pm Please log in for more thread options >>> >>> Nope. They are a medical expense, rightfully deducted on >>> Schedule A if, when combined with all other qualified medical >>> expenses, they exceed 7.5% of your AGI. >> >> If his "other job" is as an independent contractor and he files a >> Schedule C, he should be able to deduct some of it on there. > > No, he cannot. Health insurance for the self-employed is not > deducted on Schedule C. The cost of premiums goes on Line 29 of > the 1040 if they meet the criteria. In this case they don't---- > per 1040 line 29 instructions "do not include amounts for any > month you were eligible to participate in an employer-sponsored > health plan " > > Cobra is an employer sponsored plan. Thanks for the clarification. Personally I never rely on instructions to determine what the law is. I haven't researched this so I may be wrong. But if you look at §162 (l) it deals with deduction of health insurance premiums for the self employed. In subsection 2(B) it says deductibility doesn't apply, "to any taxpayer for any calendar month for which the taxpayer is eligible to participate in any subsidized health plan maintained by any employer of the taxpayer or of the spouse of the taxpayer." While COBRA might be an employer sponsored plan, it's certainly not subsidized for the former employee. In addition, during the COBRA period, the person is no longer an employee of the employer. Is there a different rule that applies? Stu -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Similar Threads Posted business expense February 14, 2009, 4:12 pm Is this a business expense? April 11, 2009, 4:32 pm Employee business expense-lease of mercedes April 15, 2007, 1:03 pm Are campaign donations deductible business expense? April 25, 2008, 3:52 pm Re: Official de minimis business expense amount June 3, 2006, 10:22 am "creative" suggestions for making child care a business expense November 6, 2006, 12:19 am Is there a tax benefit of paying for Cobra ? 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