Chief Counsel Advice 2000524001 recently reminded self-employed individuals of a fine point that some apparently have been missing lately. The earned income (net earnings) limitation for above-the-line medical premium deductions must be applied on a business-by-business basis for sole proprietors.This is not welcome news for the many individuals who cobble together a variety of jobs, none of which is a principal source of income but which, together, had been assumed to form a tax-advantaged way to cover a family's health insurance costs.

At the same time, the Chief Counsel Advice provided relief to those who worried that, because of the single business requirement for testing earned income, health insurance must be carried in the name of the business rather than that of the self-employed. The IRS has made it clear that it will allow health insurance to be taken in the name of the sole proprietor, as long as there is a designation as to which business the insurance relates.

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