Medicare Part B Deductible - Medical Expense ?

[Jonathan1]

I know that premiums for Medicare Part B (as well as supplemental, dental coverage, etc.) are considered a valid medical expense. 

May I include the year 2020 $198 deductible (which I met) in my total medical expenses for the year? 

For medical expenses, I am aware that I must meet a certain dollar threshold (evaluated against AGI).  I am aware I may include medications and diagnostic tests, etc. (unreimbursed) 

I had significant medical expenses in year 2020 and just want to know if I may include the dollar amount of "deductibles" I had to satisfy. 

[xmasbaby0 · Accepted solution]

You can enter the medical expenses that you paid out of pocket in 2020 including the deductible amounts or co-pays you paid.  If you received Social Security benefits and paid Medicare from your SS, when you entered your SSA1099 for the Social Security , the Medicare flowed over to medical expenses automatically so do not enter that a second time.

MEDICAL EXPENSES

The medical expense deduction has to meet a rather large threshold before it can affect your return. The amount of medical (including dental, vision, etc.)  expenses that will count toward itemization is the amount that is OVER 7.5% of your adjusted gross income. You should only enter the amount that you paid in 2020—do not include any amounts that were covered by insurance or that are still outstanding.  Of course, your medical expenses plus your other itemized deductions still have to exceed your standard deduction before you will see a difference in your tax due or refund.

To enter your medical expenses go to Federal>Deductions and Credits>Medical>Medical Expense

[Jonathan1]

Thank you so much for your prompt and useful reply. 

[SLYKTAX]

My wife and I just have Medicare Part B this year which is new to me and we paid more than the standard $148.50 because in 2019 she took a distribution of $45K from her 401K that put our MAGI $510 above the lowest standard limit.  We didn't have to sign up for Medicare prior because I was working with a local government.  My retirement was unexpected due to a severance package offered in December 2020.   My wife and I both get SSI payments each month and had our Medicare premium payment deducted.  I got my premium reimbursed but my wife's wasn't as her old company didn't honor it.  As I am now doing a projected 2021 income to stay on the limit and also considering doing a ROTH conversion.   Is Medicare Premium payment deducted  to your AMAGI  when SSI determine how much I need to pay?  Assuming I have another $500 over the limit.  If I donate before April 15, 2022,  can the donated amount be deducted to my 2021 AGI?  Thanks

[DanielV01]

@SLYKTAX  Is the Medicare Premium payment deducted from your AMAGI when SSI determines how much I need to pay?  While the answer to that specific question is No, there are items that are deducted.  For instance, if you are converting an IRA into a Roth, that conversion will be subtracted out of the MAGI calculations for Roth-IRA contribution limits.  Also, a maximum of 85% of your Social Security is included in your AGI.  So you may want to make sure you include those in your calculations.  But the Medicare Premium is included as part of your (standard) AGI, and there is no adjustment in the MAGI formula to remove it from calculations.

If I donate (xxx) before April 15, 2022, can the donated amount be deducted to my 2021 AGI?  No, with a caveat.  Unlike contributions to an IRA, donations must be made in the calendar tax year to be deductible.  So any includable donations must be made by December 31 to be deductible.  Unfortunately, deductions reported on Schedule A do not lower AGI,  (Standard or Itemized Deductions are reported after Line 11 and do not reduce AGI).  The caveat is that $300 of donations (and $600 if Married Filing Jointly) may be included as a "below the line" deduction that would reduce your AGI.  There is no adjustment on the MAGI instructions to add that "below the line" deduction back into MAGI for Roth Contribution limitations.

You may find the worksheet on this website helpful to determine your MAGI with respects to your income limitations:  Modified AGI for Roth Contribution Limits.  And, in a worst case scenario that you are above limits, you may still be able to perform a "Backdoor Roth" to get around those limits.  (If a Backdoor Roth is likely, you may need to execute before 2021 ends as Congress may be eliminating this through pending legislation).

[SLYKTAX]

Thanks Daniel for the INFO especially  Roth conversion will not impact the limit of a Roth contribution. Since cash donation will be considered in itemized deduction, it would work only  when we are not claiming the standard deduction then. Thanks again.