Income from your business get’s reported for Covered CA MAGI Income subsidies basically by what you put on your Schedule C and 1040 Form .

 

Schedule C Profit or Loss from Business

schedule c line 31 net profit or loss

Schedule 1  Adjustments to Income

Learn More⇒

IRS publication #974 Premium Tax Credits 

MAGI Gross Income – Line 37  – 8 b  for Covered CA subsidies.  

Schedule C

Instructions.

Problems figuring your income and expenses mid year?

Covered CA MAGI Income

Take your Line 8b Adjusted Gross income then add line 2a, 5a &   7a (Foreign Income)

of the ​2019 1040 Form   

See   2019 Schedule 1  for  Additional Income & Adjustments to Income

Iteration 

If you get tax subsidies through Covered CA to pay your premium,
the deduction claimed for the premiums under §106  * line 16  and the Premium Tax Credit (PTC)

that gets  computed,
taking the deduction into account, must be less than or equal to the premiums

Now that’s a mouth full isn’t it!

Check out  Publication 974 where there are special instructions for figuring the self-employed health insurance deduction and PTC if you or your spouse was self-employed, you or a member of your tax family was enrolled in a qualified health plan and you may be eligible for the PTC.

Because the amount of the self-employed health insurance deduction may affect the amount of the PTC, and the amount of the PTC may affect the amount of the deduction, a taxpayer who may be eligible for both may have difficulty determining the amounts of those items.

A taxpayer who may be eligible for both may follow the instructions in this part to determine amounts of the self-employed health insurance deduction and PTC that are allowable under the law.  Publication 974

Resources & Links

If you earn less than $60k, tax software is available for Free!

VITA  IRA Volunteer Income Tax Assistance

IRS Publication #535 Business Expenses

What about estimating and uneven income?  Kaiser Foundation FAQ’s.

IRS Pub. #974 Page 56.  Use the Premium Tax Credits  and not the Self-Employed Health Insurance Deduction Worksheet in Publication #535.

Main Small Biz Tax Credit and Related Pages

See our MAIN PAGE for Section 106 tax deduction for health premiums.

Health Insurance Deduction Line 29  for self employed

Schedule C – Line 12 Biz Income or Loss,  Line 29 Health Insurance Premiums,  Line 37 Adjusted Gross Income,   MAGI Income

Home Office Deduction

Self Employed Deduction for S Corp Owners

Details on Obamacare Subsidy and Line 29 deduction

Premium Tax Credit # 8962 Health Coverage Tax Credit #8885 Form 1040 and Instructions Self Employed – New Definition under Health  Care Reform – IntroductioAB 1672 – (1992 to 2013) Small Group Health Rules prior to Obamacare

 

IRS Tax Tips for Self Employed

If you are self-employed, you normally carry on a trade or business. Sole proprietors and independent contractors are two types of self-employment. If this applies to you, there are a few basic things you should know about how your income affects your federal tax return. Here are six important tips from the IRS:

  • SE Income. Self-employment can include income you received for part-time work. This is in addition to income from your regular job.
  • Schedule C or C-EZ. You must file a Schedule C, Profit or Loss from Business, or Schedule C-EZ, Net Profit from Business, with your Form 1040. You may use Schedule C-EZ if you had expenses less than $5,000 and meet certain other conditions. See the form instructions to find out if you can use the form.
  • SE Tax. You may have to pay self-employment tax as well as income tax if you made a profit. Self-employment tax includes Social Security and Medicare taxes. Use Schedule SE, Self-Employment Tax, to figure the tax. If you owe this tax, attach the schedule to your federal tax return.
  • Estimated Tax. You may need to make estimated tax payments. Try IRS Direct Pay. People typically make these payments on income that is not subject to withholding. You usually pay estimated taxes in four annual installments. If you do not pay enough tax throughout the year, you may owe a penalty.
  • Allowable Deductions. You can deduct expenses you paid to run your business that are both ordinary and necessary. An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is helpful and proper for your trade or business.
  • When to Deduct. In most cases, you can deduct expenses in the same year you paid, or incurred them. However, you must ‘capitalize’ some costs. This means you can deduct part of the cost over a number of years.

Visit the Small Business and Self-Employed Tax Center on IRS.gov for all your federal tax needs. You can also get IRS tax forms on IRS.gov/forms anytime.

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.

Additional IRS Resources:

IRS YouTube Videos:

How much subsidy to take?

 

Max Herr  —

 

When I work with a client who is self-employed and whose income is irregular/inconsistent from month-to-month, if he/she is eligible for any amount of premium tax credits, I first urge them to not take them in advance at all, if the premium for their chosen health plan is within their means to begin with.

If, however, they need the help from Uncle Sam to pay premiums, then I recommend that they accept no more than 50% – 75% of what CoveredCA estimates their monthly tax credits to be. By doing this, it gives breathing room to earn more money, and lessens the risk of having to repay any credits, or minimizes the amount of credits to be repaid.

If their income ends up as projected or less, then they will receive the balance of unused tax credits as a refund (or applied to any unpaid tax owed).

See our webpage on subsidy now or later

Steve Shorr - Covered CA Certified Agent

Steve Shorr – Covered CA Certified Agent –
Appoint Us  
No Charge for Complementary Year Around Service –
Same price as Covered CA or Direct with Insurance Company
Get instant Quotes, including APTC Subsidy Calculation

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Video on how great agents are

Publication 535 Business Expenses

publication 535 business expenses

Business Deduction
Meals & Entertainment

IRS Publication 974 

Premium Tax Credit
IRS Publication 974

Covered CA MAGI – Countable Sources of Income  

Turbo Tax Video How to Claim Tax Credit

 

aptc interactive assistant

Interactive Tax Assistant (ITA)

Am I eligible to claim the Premium Tax Credit? 

Tax Estimators

turbotax.com

H & R Block

Efile.com

Estimate the Subsidy for Health Insurance, benefits, premiums, etc.

8962 ONLINE Calculator
TaxFormCalculator.com

etax.com

ACA What You Need To Know  #5187 ACA What you need to know # 5187

IRS FAQ on Premium Tax Credit

 

Health Net Video – How to get subsidies – pay less for coverage 

 
Kaiser Foundation reports that 27% of uninsured individuals are eligible to purchase a bronze plan with $0 premiums after subsidies in 2019.  Silver plans with cost-sharing reductions (CSR) for single individuals with incomes below 200% of the poverty level can be purchased for roughly $20 to $130 per month after subsidies, depending on an enrollees’ income. KFF *

5 comments on “Schedule C – Self-Employment Income – Line 12

  1. Question:

    I received a Form 1099-MISC with an amount in box 7 for nonemployee compensation. What forms and schedules should I use to report income earned as an independent contractor?

    Answer:

    • Independent contractors report their income on Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship). However, you may qualify to use Schedule C-EZ (Form 1040), Net Profit from Business (Sole Proprietorship).
    • Also file Schedule SE (Form 1040), Self-Employment Tax, if net earnings from self-employment are $400 or more. This form allows you to figure social security and Medicare tax due on your net self-employment income.
    • You may need to make estimated tax payments. Refer to Form 1040-ES, Estimated Tax for Individuals, for more details on who must pay estimated tax. If you need to make estimated tax payments and do not pay them timely, you may also need to file Form 2210, Underpayment of Estimated Tax by Individuals, Estates & Trusts.

    Additional Information:

     

  2. Question:

    I received a Form 1099-MISC instead of a Form W-2.   I’m not self-employed and do not have a business.

    How do I report this income?

    Answer:

    If payment for services you provided is listed in box 7 of Form 1099-MISC, Miscellaneous Income, the payer is treating you as a self-employed worker, also referred to as an independent contractor.

    • You do not necessarily have to have a business for payments for your services to be reported on Form 1099-MISC. You may simply perform services as a non-employee.
    • The payer has determined that an employer-employee relationship does not exist in your case.

    If you were not an employee of the payer, where you report the income depends on whether your activity is a trade or business. You are in a self-employed trade or business if your primary purpose is to make a profit and your activity is regular and continuous.

    • If you are in a self-employed trade or business, you must include payments for your services on Schedule C (Form 1040), Profit or Loss From Business (Sole Proprietorship), or Schedule C-EZ (Form 1040), Net Profit From Business (Sole Proprietorship).
    • If you are self-employed, you will also need to complete Schedule SE (Form 1040), Self-Employment Tax, and pay self-employment tax on your net earnings from self-employment of $400 or more.
    • There is no withholding of tax from self-employment income. As a self-employed individual, you may need to make estimated tax payments during the year to cover your tax liabilities.

    If you believe you may be an employee of the payer,

    see Publication 1779, Independent Contractor or Employee, for an explanation of the difference between an independent contractor and an employee.

    For more information on employer-employee relationships, refer to Chapter 2 of Publication 15, (Circular E), Employer’s Tax Guide, Chapter 2 of Publication 15-A,

    Employer’s Supplemental Tax Guide, and Tax Topic 762, Independent Contractor vs. Employee.

    Additional Information:

  3. My wife and I have had some serious work challenges over the last year and our income has plummeted down ridiculously low but we’re still on a private-pay Kaiser plan.

    We just had our fourth child and the monthly premiums at Kaiser are getting a bit out of hand for us.

    Do we qualify for Covered California and at what level.

    We’re both self-employed at the moment so I’m not sure what kind of proof of income you need

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