I had a large capital gain in 2022, this caused me to repay my Marketplace premium discount of $6800 when I filed my taxes in April 2023. I am now filing Schedule A for the first time because of large medical bills that were paid off in 2023 that were from 2021. I would like to know if the $6800 I paid in 2023 for 2022 medical insurance can be deducted on Schedule A?
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Yes, any amount of advance payments of the premium tax credit that you did have to pay back can be included in deductible medical expenses.
See IRS Publication 502 for more information.
Yes, any amount of advance payments of the premium tax credit that you did have to pay back can be included in deductible medical expenses.
See IRS Publication 502 for more information.
Thank you, that is great news!
Since this was my husbands insurance that had to be repaid in 2023 for 2022, does this mean we would enter the repaid premium along with the premiums paid for 2023 for his insurance premiums, adding them together and enter the total for his Medical Insurance?
Yes, you can include in medical expenses the amount of health insurance premiums you personally paid. Don't include the part of the premium that you don't have to pay because you receive an advance on the Premium Tax Credit.
From IRS Publication 502:
You can't include in medical expenses the amount of health insurance premiums paid by or through the premium tax credit. You also can't include in medical expenses any amount of advance payments of the premium tax credit made that you did not have to pay back. However, any amount of advance payments of the premium tax credit that you did have to pay back can be included in medical expenses.
Example 1.
You are under age 65 and unmarried. The cost of your health insurance premiums in 2023 is $8,700. Advance payments of the premium tax credit of $4,200 are made to the insurance company and you pay premiums of $4,500. On your 2023 tax return, you are allowed a premium tax credit of $3,600 and must repay $600 excess advance credit payments (which is less than the repayment limitation). You are treated as paying $5,100 ($8,700 less the allowed premium tax credit of $3,600) for health insurance premiums in 2023. You will enter $5,100 on Schedule A, line 1.
Example 2.
The facts are the same as in Example 1, except you are allowed a premium tax credit of $4,900 on your tax return and receive a net premium tax credit of $700. You are treated as paying $3,800 ($8,700 less the allowed premium tax credit of $4,900) for health insurance premiums in 2023. You will enter $3,800 on Schedule A, line 1.
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