You may only deduct the amount of your heath insurance paid up to the amount of your business proceeds. If you claim the standard deduction, you will not be able to claim the excess Medicare premium on your federal return.
The good news is, you may itemize in California and claim this expense according to CA 540 instructions. In the instructions, it is stated that "if you did not itemize deductions on your federal income tax return but will itemize deductions for your Form 540, first complete federal Schedule A (Form 1040), Itemized Deductions in your federal return. Then check the box on Side 5, Part II of the Schedule CA (540) and complete Part II. Attach both the federal Schedule A (Form 1040) and California Schedule CA (540) to the back of your tax return." This will be automatically handled in your Turbo Tax program.
Before you you claim this excess premium amount and itemize on your Ca return, be sure to weigh the advantage of itemizing versus taking the standard deduction on your Ca return.
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