Medicare deduction for self employeed sole proprietorship

[pbeaulieu70]

Can I deduct Medicare Premiums as a business expense for LLC sole proprietorship?

I have been receiving SS for all of 2021 and my Medicare part A, B, D premiums have been automatically deducted from my SS checks.  My spouse setup a sole proprietorship LLC mid 2021.  Although she did not initially do any business till later in 2021.  Can I deduct all my Medicare premiums for the year or do I need to prorate them?   If I have to prorate them do I do it from the date she setup the LLC or the date when she retired and actively began working under the LLC?

[Mike9241]

it is not a business expense but you can deduct it as self-employed health insurance. (the difference is that as a business expense it would reduce SE taxes. this is not allowed) you can not enter these premium under the same form with your social security benefits. those carry to schedule A. as you go through the SE interview mode you should come to a question about SE health insurance 

[ColeenD3 · Accepted solution]

Theoretically, you can deduct the payments, but your business has to have a gain.

Yes, you can deduct your Medicare premiums if you're self-employed. There are two ways to do this.

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 17.

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) were 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 can't be claimed under this deduction.

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.

[pbeaulieu70]

Thanks for your reply.

The business does have enough net profit to cover the Medicare deduction.  

My spouse who is the sole proprietor of the business was covered by her employer health plan from January to August after which she went on Medicare part A, B, D.  However, her employer health care plan did not cover me because I was on Medicare and the company does not cover spouses that are on Medicare.

We file joint federal and state.  Also, the Medicare deduction would not exceed the 7.5% threshold for schedule A.

My spouse's Sole proprietorship LLC was setup in June 2021.

Therefore, can I deduct my Medicare premiums for the entire year as a business expense on her LLC?

[ColeenD3 · Accepted solution]

No, she did not have a business until June, so you would start with June.

 To enter the insurance premiums, you will do as follows:

1. Go to the Business category.
2. Go to the Business Income and Expense subcategory.
3. Choose the option "I'll choose what I work on"
4. On the screen labeled "Let's gather your business info", find the section labeled "Less Common Business Situations".
5. Click start or update next to the line labeled Self-employed Health Insurance.