Deductibility of Spouse's Medicare Premiums

[Rkra]

I am self employed and my spouse is retired.  Medicare premiums are deducted from my spouse's Social Security payments.  Are these Medicare premiums deductible a business healthcare insurance expense?

[Bsch4477 · Accepted solution]

Yes, they are. 

[jocko9825]

When entering the SSA-1099 for my wife, Turbo tax automatically includes the Medicare premiums as part of the calculation for the medical expense deduction on Schedule A.

I am self employed and want to deduct my wife's Medicare premiums as an adjustment to my business income.  When I override the Medicare premium on Schedule A, there is a warning message below that states: "Medicare premiums should not be overridden and changed for electronic filling ..."

My understanding is 100% of health insurance premiums for both myself and my spouse can be deducted as an above the line adjustment to self employed income, (given that I meet the income criteria)

If correct, why does Turbo tax prevent this from happening and is there a workaround?

Thanks

[DianeW777]

Yes, if you qualify.  Medicare premiums are an allowable deduction if you're self-employed, and there are two ways to do this.

1. The first is with the self-employed health insurance deduction. When you enter the expenses related to your self-employment, enter your Medicare premiums in the Less Common Expenses section (not the SSA-1099 section). This deduction will show up on Schedule 1, line 16.

To qualify, your Schedule C must show a net profit; this deduction isn't available if it shows a net loss. Also, if you (or your spouse if filing jointly) was eligible to participate in an employer's health plan during any given month – even if you declined the coverage – the premium you paid for that month cannot be claimed under this deduction.

       2. And that brings us to the second option. If you're unable to take the self-employed health insurance deduction for the reasons mentioned             above, you may be able to deduct your Medicare premiums as a regular medical expense if you itemize (Schedule A). 

•  See this article for instructions.

[jocko9825]

Thank you for the reply Diane....

If I don't enter the Medicare premiums in the SSA-1099, then won't I be taxed on the entire "Net Benefits" amount as shown on the SSA-1099, when I should only be taxed on the social security wages ("Net Benefits" less Medicare premiums)?

[Bsch4477]

You are taxed on the amount of social security you were paid plus (not minus) your Medicare premiums paid through Social Security. 

[TuckerdogAVL]

Hi, I have a follow up to just double check. I meet all the requirements and I just want to make sure that in entering the Part B for both of us, that I can put the TOTAL of both (this year, $3564) under my Schedule C, itemized Health Insurance, and I don't have to leave my spouse under the SS entry, correct? We are 68 and 76, and as I say, I meet all the self-employment reqs. It's sort of confusing as it's almost a "too good to be true" beneficial deduction when I can put both our Part B's under my Business expenses! 

[Bsch4477]

Yes, both Medicare premiums can be deducted as self employment medical insurance but be sure when reporting both of your social security payments you don’t also enter those premiums on the window where your social security payments are reported. They can’t be deducted both on Sch A (if you itemize) and as a self employment deduction. 

[VolvoGirl]

@TuckerdogAVL  And by the way,   

Self Employed health Insurance does not go directly on Schedule C so it will not reduce your Net Profit or self employment tax.  

If your health ins exceeds your net self-employment income it gets split. An amount equal to your net self-employment income goes on Form 1040 Schedule 1 and the remainder gets added in to medical expenses on Schedule A.

Where to enter Self Employed Health Ins

https://ttlc.intuit.com/community/entering-importing/help/where-do-i-enter-my-health-insurance-premi...

[DMarkM1]

You are correct.  You will total the premiums for you and your spouse and not enter either of your premiums in the Social Security entry topic.   Be advised that while you are entering the premium amount in the "Self-employed" topic the deduction is personal.  It will appear in your Schedule 1 line 17 not on your Schedule C.  

[TuckerdogAVL]

Terrific. Yes, I see where it shows up under Forms. 

[TuckerdogAVL]

Yes, I accidentally did that, then went back and doublechecked it. That's what took me down this road. Though it is marked either/or there's still a little confusion (as is the case with taxes) 🙂 By putting it in here instead of leaving it as Social, does help with self employment taxes though doesn't it? 

[TuckerdogAVL]

Thanks. Personally, there's no premium (the premium with our insurance is Zero); so, just the Part B and where that goes. 

[TuckerdogAVL]

@dmark. There's no "mark as best" to choose. Sorry. 

[TuckerdogAVL]

For reasons known only to the insurance gods, we don't pay a premium for the Medicare Advantage Plan we have.