My scenario: Wife and I have recently ER'ed, and will be buying health insurance starting next month.
I've a very small side business I've run for years, filing a schedule C, taking appropriate deductions, and showing a very small profit each year. Constant and steady income, it shouldn't change.
While employed, it provided a minuscule portion of our overall income - less than 3%. In retirement, that will jump slightly - but it will still be small, just a tad over 5%. Our primary source of income will come from pre-tax investment accounts and two decent pensions.
If our income was solely derived from self employment, I'm under the impression we could deduct health care expenses in their entirety as a business expense. On the other end of the spectrum, were we living solely on investment and pension income, we could only deduct the portion of health care related expenses beyond 7.5% of AGI. In our case, that results in no deduction as long as we stay healthy.
So, the short version of the question: Does a small side business as described above allow me to deduct any or all of our health care expenses? Were I able to deduct 100% as a business expense, the profit from the business would be near zero or a slight loss, based on current health care premiums.
I've a very small side business I've run for years, filing a schedule C, taking appropriate deductions, and showing a very small profit each year. Constant and steady income, it shouldn't change.
While employed, it provided a minuscule portion of our overall income - less than 3%. In retirement, that will jump slightly - but it will still be small, just a tad over 5%. Our primary source of income will come from pre-tax investment accounts and two decent pensions.
If our income was solely derived from self employment, I'm under the impression we could deduct health care expenses in their entirety as a business expense. On the other end of the spectrum, were we living solely on investment and pension income, we could only deduct the portion of health care related expenses beyond 7.5% of AGI. In our case, that results in no deduction as long as we stay healthy.
So, the short version of the question: Does a small side business as described above allow me to deduct any or all of our health care expenses? Were I able to deduct 100% as a business expense, the profit from the business would be near zero or a slight loss, based on current health care premiums.