Statutory Employee who is now retired & still getting W-2 marked as Statutory Employee

[GraceNY]

I am questioning the following:

New client.  Has been receiving a W-2 marked as a statutory employee reporting renewal commissions.  Former insurance agent.  Retired on 2016.

The previous preparer has been putting this income on Schedule C.  Only expense on C is tax preparation.  He has also been taking the Self-Employed Health Insurance deduction (Medicare and Supplemental Insurance) and having her put money in a deductible IRA.

Maybe the IRA contribution is o.k. as W-2 is considered earned income? But the SEHI deduction?  She's retired and has not  performed any services or wrote any new business since leaving the company in 2016.

Thoughts?

Thanks in advance for any input.

Grace

[Catherine]

It does go on Sch C.  These are for trailing commissions, that are received for several years after a sale is made (how long depends on what was sold and the terms of the sale).  They'll stop in another year or three.

Not sure that SEHI is kosher here, but the IRA is, as this is earned income.  It's just that it was earned years ago and is only paid out if the purchaser keeps/renews the product (insurance or annuity).