Finally, a clear answer from IRS

[kcjenkins]

From another list:

Just got this in from the IRS on the deduction for Medicare Part B for sole proprietors.

My question of IRS was:

There is a conflict regarding the treatment of Medicare Part B premiums as self employed health insurance. I see that on page 29 of the IRS Form 1040 instructions it states that Medicare Part B premiums can be used in

figuring the deduction, but there is a reference to Pub. 535. On page 18 Pub. 535, it states that Medicare Part B premiums are not considered to be medical insurance premiums for purposes of the Self Employed Health Insurance deduction.

The IRS Response is:

"Hi Jim,

It turns out that the IRS revisited its position on this issue. Here is what I received back.

Treasury clarified their position late last year. Medicare B premiums meet the definition and requirements for the SEHID (I believe the cite is RP 2008-1) if they are paid by or reimbursed by the company; for a schedule C, the company and the individual are one and the same, so Medicare B premiums would always qualify for a sole proprietor.

The issue will be clarified when the 2010 Pub 535 is issued and I was told they may reference earlier years in that publication. My understanding is that the same guidance should have been in effect for prior years.

Sorry it took so long to get the response. We've been hearing about this from various parts of the country."

So to whoever brought this issue up to our group thank you and I guess this will be the final answer.

Jim

James C Counts II, CPA CTFA

Hemet, CA

[Kea]

I mentioned this to one of my self-employed clients. They asked if that included supplemental Medicare premiums. Based on the above, I would say "Yes."

Am I missing something? (OK, I probably am but I'm not going there right now. )

[TAXBILLY]

Supplemental insurance is also eligible.

taxbilly

[Kea]

Thanks for the confirmation.

[DonnaA]

Does this mean we can deduct the Medicare Part B and supplemental insurance for the Spouse also, even though the Part B premiums are withheld from the Spouse's Social Security benefits? And can we amend all open years?

[grandmabee]

Does this mean we can deduct the Medicare Part B and supplemental insurance for the Spouse also, even though the Part B premiums are withheld from the Spouse's Social Security benefits? And can we amend all open years?

SPOUSE yes