Where do I enter the Michigan State medical portion of the auto insurance premium?

[nateedogg32]

What is the best way to calculate the three categories included PIP and medical cost?

[ToddL]

If your insurer does not provide a breakdown (how much of PIP is for Medical Benefits), You have to make a goo-faith estimate. Reasonable options are to 1) claim 1/3 of the PIP premium as Medical Benefits, or 2) claim the majority (80%?) of the PIP premium as Medical Benefits. My rationale for the 80% approach is that, of the three coverages included in PIP, medical costs are almost certainly the most costly.

[nateedogg32]

Thank you

[ttblog555]

The answer from Turbo Tax is not quite complete.  It is misinterpreting by mixing two separate coverage lines/charges to the Michigan No-Fault policy.  One is the Personal Injury Protection (PIP).  Under this line:  Although identified by a blogger as split into three categories of benefits, auto policies typically identify two which are the PIP Medical (written as Excess/coordinated with the household medical) or Full as in first dollar), and PIP Wage Loss.  Some insurers do not provide a premium breakdown, some do.  When not split, utilizing the 80/20 rule (if acceptable by the State) should be a fair division.  THIS coverage IS a premium from the insurance company that goes to paying claims for these losses up to a certain amount.
The Second coverage line that was referenced, but mixed in above, is the Michigan Catastrophic Claims Association (MCCA) assessment.  This coverage is a state fund that supplements the Auto insurer's policy for catastrophic medical claims the exceed a certain amount, transferring the risk from the insurer, to this fund.  Most insurers split this assessment out on their policy, a few include it under PIP.  However, it is a standard charge so the agent should be able to break this out each year for their customer.    Is this assessment also deductible?   That I do not know, but it is a "medical" expense per se'.   Answer from Independent Insurance Agent

[BlackjackWidow]

With the utmost respect to TurboTaxToddL, I understand exactly your position and appreciate your research. You cited the IRS guidelines regarding what is considered medical premiums. I do not see the source for your conclusion that the full Michigan Personal Injury Protection premium is not the "medical portion of the auto insurance".  I understand your logic behind it, and it will certainly not be incorrect to enter only a portion of the PiP in this part.

I will, however, make note that the PiP seems to generally be considered the medical portion of the auto insurance policy. This Council on Aging brochure http://www.gratiotmi.com/LinkClick.aspx?fileticket=u-yN_Lr3n64%3D&tabid=140 lists the PiP specifically as one item to bring to appointments where they're helping the elderly file their taxes. A Google search for similar items turns up a few more. I believe it is one of those not-very-well-defined terms in the Michigan code. 

As it is listed on my policy, it is Personal Injury Protection and covers my medical needs in the case of an accident. Therefore, in the broad terms defined in the Michigan State tax laws, it appears to me to be insurance for my medical needs, and satisfies the criteria.

[bwa]

TurboTaxToddL's post and reference were correct, they just don't apply to this post.  You can't use an IRS federal statute definition of medical insurance and apply it to state income tax law.  As an easy to read source, MI's Form 1040 instructions include under medical insurance "Automobile insurance (medical care portion only)."  See the instructions for line 31 (<a rel="nofollow" target="_blank" href="https://www.michigan.gov/documents/taxes/1040_Book_with_forms_508951_7.pdf">https://www.michigan.gov...>)

[bwa]

Michigan has such a deduction. It is usually identified on your insurance bill as PIP (Personal Injury Protection) but may have some other name. You would be asked about it in the Michigan state interview.  There is no such deduction on a federal return.

[sonuvabish22]

Everything you pay to an insurance company is a premium.  The insurance company doesn't have to pass on the MCCA cost to you, but it chooses to do so.  You pay a PREMIUM and you get unlimited MEDICAL.  The very definitions of words make it obvious this is deductible in that section.  There are statutory fees for non-medical items, and because the state has an unbalanced budget.  This amount is $31 to date, which is NOT deductible.  Additionally, the costs exceeding $161 (as of 2018) for the MCCA assessment (they will always charge more for administrative costs) are not clearly allowed or disallowed, except for the medical portion of the PIP, which is clearly allowed.  Typically more than 95% of the PIP is eligible, assuming it is a separate line item from the MCAA, although most will say 80%.  Taking the full deduction might be uncommon, and you might find yourself in a letter writing war with a revenue agent from the Treasury as smart as Todd, all in an effort to try and save an extra $6.  Regardless, it's pretty clearly allowed and the negative consequences for taking a good-faith position amounting to less than a $10 difference are next to nil.  I'm a lawyer by the way.  Accounting types are always trying to avoid audits--tax preparers typically are willing to defend you in an audit because they will get you substantially less of a refund than you should get (which ensures you won't get audited), and of course they charge you for it.  None of this is advice, do what you will at your own peril.  Have a lawyer do your taxes.  It might be cheaper in the long-run than using Turbo-tax.  

[abgmann]

Turbo Tax asks the question under the Homestead credit. However, if you don't qualify for the homestead credit, entering this premium does nothing to change your tax liability or refund. Homestead credit is based on income. I'm putting this here so those who already are over income, don't stress about it.  Otherwise asking your insurance agent the amount can get you a number.