Medicare Premiums Deduction

[heneggs55]

Are Medicare Premiums that my wife and I have paid considered deductible if we itemize?  

If we don't itemize and take the standard decuction, can the Medicare Premiums paid be used as a deduction on our State income taxes?  Idaho

We are not taking social security yet.

Thank You,

[JulieS · Accepted solution]

Yes, the Medicare premiums are deductible as medical expenses.

If you are collecting Social Security, the amount will automatically transfer from your SSA-1099 entry.

Since you are not drawing Social security yet, you can enter the amount directly in the Medical deductions section. 

1. Select Federal from the left side menu.
2. Select Deductions and Credits toward the upper left. 
3. Expand the list and scroll down to Medical Expenses.
4. Click Continue until you get to the screen titled, How much did you spend on insurance premiums?
5. Look for Medical insurance premiums, enter your amount and Continue.

[bgoldnyxnet]

My wife is a sole proprietor of two small magazines. Can she treat her Medicare part B, Medigap, and Part D premiums as business expenses (like employee health insurance)?

Can she do that with my premiums, and if so what is necessary for her to treat me as an employee for that purpose?

[DawnC]

Yes, Medicare policies count for the Self-Employed Health Insurance Deduction (SEHID).   She can take the self-employed health insurance deduction for herself, spouse and dependents if her business Schedule C shows a profit and no one was eligible to participate in an employer-based health insurance plan.    See - Medicare and the Self-Employed Health Insurance Deduction.     The deduction is limited to net business profit reported.   Anything that can't be included as a self-employed deduction can be claimed as an itemized medical deduction on Schedule A.    @bgoldnyxnet

Since you are her spouse, you don't need to be employed by the business.   Any health insurance policies should be in her name or the name of the business to deduct as a SEHID.    However, Medicare does not have group policies, only individual policies.  The IRS has recently ruled that Medicare recipients who have self-employment income may deduct the premiums they pay for Medicare coverage the same as the premiums for any other type of health insurance.

[wheman]

If you are drawing social security can you include your medicare premiums with your other med insurance premiums ?  I do not see the SSA-1099 amount transfering  over.  Thanks

[JulieS]

Yes, you can deduct your Medicare premiums as part of your medical expenses, if you itemize. 

TurboTax will do this automatically, just enter your Medicare premiums when you enter your Social Security benefits, on the SSA-1099 screen. When you visit the Medical deductions section, you will see the amount that was carried over on the screen, How much did you spend on insurance premiums?

[xmasbaby0]

If you are getting Social Security benefits, the Medicare premiums you paid from your SS do flow in to medical expenses when you enter your SSA1099.  So do not enter it again.

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 2022—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 Expenses

2022 STANDARD DEDUCTION AMOUNTS

SINGLE $12,950  (65 or older + $1750)

MARRIED FILING SEPARATELY $12,950  (65 or older + $1750)

MARRIED FILING JOINTLY $25,900  (65 or older + $1400 per spouse)

HEAD OF HOUSEHOLD  $19,400  (65 or older +$1750)

Legally Blind + $1750

[danahrtn]

My wife is self-employed. I am retired, but still get to participate in my former employer's subsidized health care plan. Does that count the same way as if I were still employed -- meaning my wife is not allowed to claim Medicare premiums as a business expense. I do not know if the rules change after I retire.

[Vanessa A]

No, the rules do not change for the subsidized health care plan when you retire.  If you have employer sponsored healthcare, the premiums are not deductible as a business expense whether you are still working or you are covered as a retiree.

  However, the Medicare Premiums are not employer subsidized premiums so Medicare Premiums can be deductible as a business expense if you otherwise qualify to deduct the expenses. Health Insurance premiums cannot be deducted for more than your business income.  In other words, the premiums cannot create a  loss for the business, but can bring your profit down to $0. 

[bgoldnyxnet]

What if my Medicare premiums are more than the proceeds from my business? I went through this last year and couldn't figure out a way to take part of the deduction against my business and part as personal deduction. Is there a way to make that work?

Or maybe that's irrelevant. IIRC, I've been using the Standard Deduction ever since the SD got raised. It's still useful on my state income tax (Calif), though.

[DaveF1006]

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.

@bgoldnyxnet 

[smcapps47]

TurboTax pulls all Medicare insurance premiums from the SSA-1099 forms.  This is incomplete.  A portion of our Medicare Part D is paid from our checking account, as are our United Healthcare Supplemental premiums.  How do we handle these entries?  Also, how do we handle entry of our dental insurance premiums?  

The TurboTax instructions are neither accurate or complete.

[xmasbaby0]

The Medicare payments that are deducted from your Social Security flow into the medical expense area automatically when you enter them from your SSA1099.  The supplemental premiums you paid and your dental premiums can be entered manually in medical expenses.

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 2023—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 Expenses

2023 STANDARD DEDUCTION AMOUNTS

SINGLE $13,850  (65 or older/legally blind + $1850)

MARRIED FILING SEPARATELY $13,850  (65 or older/legally blind + $1500)

MARRIED FILING JOINTLY $27,700  (65+/legally blind) )  + $1500 per spouse

HEAD OF HOUSEHOLD  $20,800 (65 or older/blind)  + $1850)

[jtb5]

We both started taking SS last year, me in March and my wife in June.  We have paid Medicare premiums since January but The SS 1099 we received doesn't show the Medicare I paid for jan- April and Jan- June for my wife.  Do I include them separately somewhere without getting documentation from SS?  

We also paid Medicare all last year too but wasn't aware we could deduct it. 

[VolvoGirl]

Yes you can deduct the amount you paid that wasn't on the SSA-1099 from SS.  It is a Medical deduction if you itemize.  The amount on your SSA-1099 will automatically flow over to schedule A deductions.

To enter Medical expenses just start typing Medical in the search box at the top of your return and pick "medical expenses, sch a" from the drop down list. Then click on Jump To at the top of the list.

OR
Enter Medical under
Federal Taxes Tab or Personal (for H&B)
Deductions and Credits
Then scroll way down to Medical
Then Medical Expenses - click Start or Update

You can only deduct the amount of unreimbursed Medical Expenses you actually paid over 7.5% of your AGI. So it might take a lot to be worth entering. And then all your itemized deductions have to be more than the standard deduction to get any benefit (so you would only be getting the benefit of the amount that puts you over the standard deduction). And since the Standard Deduction is increased more people will not need to Itemize.

For 2024 the standard deduction amounts are:

Single 14,600 + 1,950 for 65 and over or blind (16,550)

HOH 21,900 + 1,950 for 65 and over or blind (23,850)

Joint 29,200 + 1,550 for each 65 and over or blind (30,750/32,300)

Married filing Separate 14,600 + 1,550 for 65 and over or blind (16,150)