The National Directory of Certified Public Accountants

Ask A CPA - Partnerships - Form 1065

How Does A Partnership Deduct Health Insurance Premiums?

A partnership that pays premiums for health insurance for its partners has a choice. It may treat the premium as a reduction in distributions to its partners or deduct the premium as an expense and charge each partner's share as a guaranteed salary payment taxable to the partner. The partner reports the guaranteed payment as non-passive income on Schedule E and 100% of the premium as an adjustment on Form 1040 line 29.

If you need professional help with "Partnerships - Form 1065" or have other tax questions, we can help you find a local licensed CPA for a free, no-obligation consultation.