Another $250 payment to deal with?

[dyne]

I received a brochure from Medicare which says: "If you enter the part D "donut hole" this
year, you will receive a one-time, $250 rebate check if you are not already receiving
Medicare Extra Help." The same information can be found at www.medicare.gov. This
$250 payment sounds similar to the $250 Economic Recovery payment of 2009. I hope
this payment described in this brochure does NOT have to be used to reduce the
Making Work Pay Credit available on the 2010 federal tax return. Does anyone know
if this new payment will affect the 2010 tax return?

[ChEAr$]

I received a brochure from Medicare which says: "If you enter the part D "donut hole" this
year, you will receive a one-time, $250 rebate check if you are not already receiving
Medicare Extra Help." The same information can be found at www.medicare.gov. This
$250 payment sounds similar to the $250 Economic Recovery payment of 2009. I hope
this payment described in this brochure does NOT have to be used to reduce the
Making Work Pay Credit available on the 2010 federal tax return. Does anyone know
if this new payment will affect the 2010 tax return?

I see no reason why is would reduce tax year 2010 Obama money. After all, it is what it is,
a medicare rebate, and not any kind of economic recovery payment.

[dyne]

I entered Medicare Extra Help in Google and it explained that single people with less than
$11,700 of RESOURCES or married couples with RESOURCES of less than $23,410
and whose income is limited may qualify for medicare extra help toward paying for
Medicare Prescription Drug Coverage. But those amounts are for 2007 and the amounts
for 2010 were not provided. The use of RESOURCES and income is confusing. It appears
that this will not apply to most of our clients.

[taxea]

I don't have any clients w/ M-D. If it is deductible on Sch A I would think that the rebate amount would just be adjusted out of the total payment.

[taxmom34]

i am not sure, but, i believe that people who have premium D and paid more than $2830 in prescriptions will be the ones receiving this $250 rebate, therefore , it seems to make sense that IF you are itemizing and prescriptions are over this amount you would ask if he/she received it and apply as a negative in insurance reimbursement to reduce the medical deductions. And if not itemizing you don't have to deal with it. but, that is common sense

[FEDUKE404]

Schedule A offset?

It is my understanding that this "rebate" only applies to someone with a Medicare D drug plan who also enters the infamous doughnut hole during the tax year.

That combination will eliminate virtually all of my clients from having any interaction with the scenario.

My guess is this money would be treated as a reduction in allowable medical costs that could potentially be claimed as an itemized deduction, not unlike how insurance reimbursements factor in.

Since the Making Work Pay Credit was, more or less, a rebate of FICA taxes in a very indirect way, at this time I don't see this income as creating a tax issue other than possible Sch A offset.

FE

[taxea]

The 250. will only go to those with Medicare D

[S T]

Part D

is the prescription drug coverage that can be purchased from an Insurance Co, such as Blue Cross, Blue Shield, or you can also be enrolled through Medicare and is deducted from your SS benefits. Some of my t/p have their RX through medicare and the SSA 1099 will show Part B and Part D deductions.

According to the link - the $ 250 that might be issued to some t/p will not be taxable.

http://www.medicare.gov/Publications/Pubs/pdf/11464.pdf

Sandy