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Old 10-21-2012, 11:42 PM   #21
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There are no receipts as Sue's students pay her in cash for the painting sessions.
Is Sue running a business and declaring the revenue to the IRS?
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Old 10-22-2012, 03:06 AM   #22
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At the moment she is not running a business. Her students just pay her cash, and I assume she declares the revenue to the IRS.
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Is Sue running a business and declaring the revenue to the IRS?
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Old 10-22-2012, 08:11 AM   #23
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A friend of mine, let's call her Sue, gives private painting lessons. She has problems getting individual healthcare insurance because of her history of breast CA. All her customers pay her cash, by the session. Sue could theoretically set up a business with her partner, they both would add say $400 a month cash from their savings into the business' bank account, they would generate an annual small "profit" but both Sue and her partner would have their pre-conditions covered. So Sue would have her breast CA history covered, correct ?
"Income" would only be cash received from customers for services provided (in this case, painting lessons). Cash transferred from personal savings to the business would be a capital contribution and not income. Sue should keep good records of how much she received and from whom to support what she declares as income on Sch C.

Sue could deduct HI to the extent of income (after the 50% SE tax deduction) as long as the deduction doesn't result in a loss. Any HI that can;t be used on Sch C could be deducted on Sch A (subject to the 7.5% limitation).
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Old 10-24-2012, 06:05 AM   #24
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I have discussed this with a CPA here. From what I understand, capital contributions can therefore be used indirectly to buy healthcare insurance. I would like to know if anyone here who has their own business has been able to do this.
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"Income" would only be cash received from customers for services provided (in this case, painting lessons). Cash transferred from personal savings to the business would be a capital contribution and not income. Sue should keep good records of how much she received and from whom to support what she declares as income on Sch C.

Sue could deduct HI to the extent of income (after the 50% SE tax deduction) as long as the deduction doesn't result in a loss. Any HI that can;t be used on Sch C could be deducted on Sch A (subject to the 7.5% limitation).
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Old 10-24-2012, 06:19 AM   #25
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I have discussed this with a CPA here. From what I understand, capital contributions can therefore be used indirectly to buy healthcare insurance. I would like to know if anyone here who has their own business has been able to do this.
Oby, I know individuals in similar situations. The key to getting health care coverage for your friend (or anyone else in similar situation) is having verifiable schedule C income to prove she is a "business of one" and therefore qualifies as a small business. Health insurance companies must provide policies to small businesses. They can be underwritten, and in most states businesses of one or two employees have limited policy options, but they cannot be denied coverage. To be eligible as a small business, however, the owner will need to provide several years of tax and financial records to the insurance company. The State insurance regulatory board will have defined together with the major insurance companies the business activity needed to qualify this way.
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Old 10-24-2012, 07:39 AM   #26
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"Income" would only be cash received from customers for services provided (in this case, painting lessons). Cash transferred from personal savings to the business would be a capital contribution and not income. Sue should keep good records of how much she received and from whom to support what she declares as income on Sch C.

Sue could deduct HI to the extent of income (after the 50% SE tax deduction) as long as the deduction doesn't result in a loss. Any HI that can;t be used on Sch C could be deducted on Sch A (subject to the 7.5% limitation).
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I have discussed this with a CPA here. From what I understand, capital contributions can therefore be used indirectly to buy healthcare insurance. I would like to know if anyone here who has their own business has been able to do this.
You didn't understand my point. Surely capital contributions can provide the cash that is used to pay premiums. However, the objective is to bet a tax benefit from the premiums and if the premiums are to be deductible, they are only deductible to the extent that you have income and capital contributions don't count as income.
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Old 10-24-2012, 07:50 AM   #27
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Oby, I know individuals in similar situations. The key to getting health care coverage for your friend (or anyone else in similar situation) is having verifiable schedule C income to prove she is a "business of one" and therefore qualifies as a small business. Health insurance companies must provide policies to small businesses. They can be underwritten, and in most states businesses of one or two employees have limited policy options, but they cannot be denied coverage. To be eligible as a small business, however, the owner will need to provide several years of tax and financial records to the insurance company. The State insurance regulatory board will have defined together with the major insurance companies the business activity needed to qualify this way.
In my case, I had just organized the business so I didn't have any tax returns but I provided my certificate of incorporation issued by the state and they accepted it.
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Old 10-25-2012, 07:02 PM   #28
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May I please ask you how you did this? Feel free to PM me.
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In my case, I had just organized the business so I didn't have any tax returns but I provided my certificate of incorporation issued by the state and they accepted it.
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Old 10-25-2012, 09:41 PM   #29
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May I please ask you how you did this? Feel free to PM me.
I organized an LLC for any consulting that I may do. It is a fairly simple form (one page IIRC) filed with the Secretary of State plus a fee ($25 IIRC) and then assuming that your paperwork is in order you receive articles of incorporation in a few weeks. I'm somewhat knowledgeable about such things from my work so I didn't need a lawyer - just worked my way through the forms.
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