Medicare Part B premiums

[MargaretMort]

Yesterday I downloaded the updates and corrections for the Tax Materials The Tax Book and looked them over. The NATP question recently was about using Medicare Part B premiums as a health care deduction for self-employed on the Schedule C. The answer was that no that was not a deduction. The updates for the TAX Book re: Self Employed Health Insurance Deduction says the 2010 Form 1040 instructions say Medicare Part B premiums can be used to figure the deduction.

Now I am totally confused. Are you planning on using Medicare Part B premiums as a SE health insurance deduction? Thanks. MM

[TAXBILLY]

Medicare premiums are considered medical insurance for self employed purposes.

http://www.irs.gov/pub/irs-wd/0524001.pdf

It is not a deduction on Schedule C as your question suggests but it is a deduction on 1040, page 1 subject to limits and is also deducted for self employment tax purposes on Schedule SE for 2010.

taxbilly

[MargaretMort]

Thanks, I had read that also, neatly forgot it. MM

[MargaretMort]

Okay, back again. I feel like I am on another planet today so bear with me. I made sure the tax program was updated then I opened my return and clicked on the Sch SE just so I would know all about this new "bene". The SE is still a draft, the instructions are: Line 1-a Enter Net profit (or loss) from Sch F, line 36, and Faarm partnerships, Sch K-1 (Form 1065) Box 14, Code A

Line 1-b If you received SS retirement or disability benefits, enter amount of Conservation Reserve Program payments included on Sch F, Line 6-B or listed on Sch K-1 Box 20, code Y.

What on God's Green Earth does that have to do with deducting Medicare Part B payments or, really, anything else? MM

[clay]

Using the F1 key to obtain instructions for self employed health insurance deductions for the 1040, the intructions state "Medicare premiums cannot be used".

[MargaretMort]

Ah, but the update for the TAX Book says otherwise. I have read pro and con and searched for a definitive answer and I still don't know the answer. The confusion exists and, if medicare premiums can be used--and, quite frankly, I can't think of a client this would even apply to except me--then I should be able to use them. MM

[clay]

We need something from the IRS.

[kcjenkins]

We need something from the IRS.

We already have something from them, and it is good news on this issue, IMHO.

http://www.irs.gov/pub/irs-wd/0524001.pdf

Based on this, I DO take the Part B premium on them, if it applies. I know we can not 'cite' it, but that does not mean we can not consider it.

[mcb39]

Ah, but the update for the TAX Book says otherwise. I have read pro and con and searched for a definitive answer and I still don't know the answer. The confusion exists and, if medicare premiums can be used--and, quite frankly, I can't think of a client this would even apply to except me--then I should be able to use them. MM

That would be me, too, Margaret and you raise a very good question. Both Taxbilly and KC have documented a "yes".

Refer to Master Tax Guide, Paragraph 1019, Page 374 which states: "However, the cost of extra Medicare (Medicare B ) is deductible." Section 7,240.05

[TaxmannEA]

Okay, back again. I feel like I am on another planet today so bear with me. I made sure the tax program was updated then I opened my return and clicked on the Sch SE just so I would know all about this new "bene". The SE is still a draft, the instructions are: Line 1-a Enter Net profit (or loss) from Sch F, line 36, and Faarm partnerships, Sch K-1 (Form 1065) Box 14, Code A

Line 1-b If you received SS retirement or disability benefits, enter amount of Conservation Reserve Program payments included on Sch F, Line 6-B or listed on Sch K-1 Box 20, code Y.

What on God's Green Earth does that have to do with deducting Medicare Part B payments or, really, anything else? MM

Farm owners on Social Security who get CRP payments do not have to pay SE tax on the payments. They do pay SE tax on their other Sch F income, if they have any.

[Diane]

I am self employed and we pay an amount (each) to the local union who provides our health insurance. I and my husband are both retired and on Social Security. Can I deduct the amount that I am charged for this insurance on the 1040? and on the SE?

Diane

[kcjenkins]

Yes

[Diane]

Thanks,

Diane

[clay]

I am self employed and we pay an amount (each) to the local union who provides our health insurance. I and my husband are both retired and on Social Security. Can I deduct the amount that I am charged for this insurance on the 1040? and on the SE?

Diane

If the health insurance you have is a subsidized health plan maintained by your employer or your spouse's employer, then you cannot take the deduction. So the question is whether the union pays any part of the cost; and did you have a subsidized plan from your employer and was your husband eligible to participate in the plan.

[Diane]

No, the union does not pay any part of their retiree's health care costs. I've been self employed for years, so I have had no employer plans. We pay for everything.

Diane