Medicare Deduction from Soc Sec

[juleyh]

I just started Medicare and deductions come out of my social Security Benefit.

Do I have to enter the Medicare Premiums into Schedule A, wherein it is only deductible if I exceed 7.5% of my AGI? What about people who take the Standard Deduction and don't itemize?

We pay into Medicare from our income. We retire. Then they want us to pay tax on the Medicate premiums they charge us?  I just want to be certain I am understanding this correctly.

I probably shouldn't be surprised, but even if I have to pay tax, I don't feel that people who can't or don't itemize should have to pay tax on Medicare premiums if their income is below, say, $30-40k.

[DoninGA · Accepted solution]

Your Medicare Part B premiums are a medical expense that can be reported as an itemized deduction on Schedule A.

If you do not have enough itemized deductions to exceed the Standard Deduction for your filing status then itemized deductions will not be entered on your federal tax return.

You are not being taxed on the Medicare Part B premiums you pay,  If not used as an itemized deduction the premium payment is not reported on a tax return.

Up to 85% of Social Security Retirement/Disability/Survivors benefits becomes taxable when all your other income plus 1/2 your social security reaches:

Married Filing Jointly - $32,000
Single or Head of Household - $25,000
Married Filing Separately - 0

[Bsch4477 · Accepted solution]

When you get your SSA-1099 social security tax form you report your Medicare premiums which automatically transfer to Schedule A. If you don’t itemize that is just ignored. You are taxed on your total social security income. 

[gman08724]

Question: My Medicare premiums were entered via my SSA-1099. My wife does not collect SS yet and she pays Medicare directly. Do I enter her Medicare premium in the "Additional Medical Insurance premiums" box in the Deductions and Credits section? 

[Vanessa A]

Yes, if you are trying to claim the itemized deductions instead of the standard deduction, you will need to enter her Medicare premiums you pay in the "Additional Medical Insurance Premiums" as well as the premiums for any supplemental plans she may have.  

Keep in mind, your health insurance and all medical expenses are only deductible for the amount that is over 7.5% of your AGI.  This means if your AGI is $50,000, then the amount that is over $3,750 is deductible.  

Itemized expenses include mortgage interest, gambling losses up to winnings,  charitable contributions, state and local taxes up to $10,000, medical expenses in excess of 7.5% of your AGI and casualty and losses in excess of 10% of you AGI with the first $100 not counting towards the loss.  

Then your total itemized expenses would need to be greater than your standard deduction below in order to benefit from your expenses. 

The 2024 Standard Deductions are as follows:

• Married Filing Joint (MFJ)              $29,200
• Married Filing Separate (MFS)      $14,600
• Head of Household (HOH)             $21,900 
• Single                                                 $14,600                                

Blind or over 65 and MFJ or MFS add $1,550

Single or HOH if blind or over 65 add $1,950

Standard versus Itemized Deduction

[gman08724]

Thanks for the response. Although we will not meet the 7.5% of income threshold on the Federal return it does impact our State return and knowing where to enter it is helpful.

[abazba12]

I DO itemize for Schedule A but I don’t meet the 7.5% level of medical expenses needed in order to deduct medical expenses on my 1040.  

Based on your answer, I will be paying taxes on the Medicare premiums deducted from my social security gross benefit amount, or at least 85% of it because my income is too high. Did I get that right?

[DoninGA]

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@abazba12 wrote:

I DO itemize for Schedule A but I don’t meet the 7.5% level of medical expenses needed in order to deduct medical expenses on my 1040.  

Based on your answer, I will be paying taxes on the Medicare premiums deducted from my social security gross benefit amount, or at least 85% of it because my income is too high. Did I get that right?

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No, the Medicare premiums would not be entered on your tax return.  You are only taxed on the Social Security benefits you received as shown in box 5 of the SSA-1099.

[abazba12]

Thanks. So Bsch4477’s reply that “You are taxed on your total social security income” really means “You are taxed on your total social security income minus Medicare premiums because Medicare premiums are not included in box 5 on my 1099.” Did I get that right?

[DoninGA]

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@abazba12 wrote:

Thanks. So Bsch4477’s reply that “You are taxed on your total social security income” really means “You are taxed on your total social security income minus Medicare premiums because Medicare premiums are not included in box 5 on my 1099.” Did I get that right?

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Sort of correct.  The Medicare premiums are paid from the SS benefits you receive.  Your total benefits received are in box 5.

[abazba12]

Well, my total Soc Sec Benefits will include my Medicare, so if box 5 includes all benefits from Social Security (including Medicare), then it sounds like my Medicare amounts will be taxable because they will be included in box 5?

[DoninGA]

@abazba12 

No your Social Security benefits do not include health care.  The benefits are used to pay the Medicare premiums. 

Just like when you work for wages, the wages can be used to pay for your health insurance premiums or or your car insurance premiums or the mortgage on your home each month.

[VolvoGirl]

Sorry I have to disagree.   I think the prior replies were missing the point of your question.    Is box 5 the same as box 3?   Yes the Medicare Premium deduction is included in the Net Benefits in box 5.  So they will be part of any taxable Social Security amount.   But no they are not income or taxable by themselves.    If the  Medicare premium was not included in box 5 benefit income then you wouldn't be able to deduct them on Schedule A as an itemized  deduction.  

[DoninGA]

Yep...You are correct.  Got myself turned around on this one and should have known better.  Thanks @VolvoGirl