Medicare B And D

[TAX4US]

Here we go again.Medicare B and D for self employed's or not. Consenus of opinion. What do you plan to do?

[JSLATER]

From the NAEA Webboard - for 2010 the IRS apparently has reversed its position on this issue, as follows from a discussion begun by another EA:

The following is the response received from the IRS:

"Thank you for your inquiry dated 01/18/2011, I apologize for the delay in responding to your question. There was a change for 2010 allowing Medicare Part B Premiums to be used to figure the Self-Employed health insurance deduction. In previous years, Medicare Part D payments were allowed, but not Part B payments. As you mentioned, the 1040 Instructions do state that you can use Part B payments in calculating the deduction for 2010."

From ATX community board

[ChEAr$]

From the NAEA Webboard - for 2010 the IRS apparently has reversed its position on this issue, as follows from a discussion begun by another EA:

The following is the response received from the IRS:

"Thank you for your inquiry dated 01/18/2011, I apologize for the delay in responding to your question. There was a change for 2010 allowing Medicare Part B Premiums to be used to figure the Self-Employed health insurance deduction. In previous years, Medicare Part D payments were allowed, but not Part B payments. As you mentioned, the 1040 Instructions do state that you can use Part B payments in calculating the deduction for 2010."

From ATX community board

But 2%'ers as corporate officers are out of luck in arranging for the corporation to reimburse them for those premiums as part of the corporate medical plan.

[Earl]

Part B

Would think that if one spouse is self-employed and both spouses receive SS and are enrolled in Part B that only the medicare premium on the self-employed spouse could be counted.

[Kram BergGold]

only the SE

I say only the one gets it.

[jimenright]

SE Health Deduction is for

Taxpayer, spouse, dependents and children. See TTB updated page 1-14. If part B is included, as the 1040 instructions say, then part D is also.

[Earl]

Medicare B

My observation above had to do with both spouses paying medicare premiums. However, only one spouse had self-employed income. Since plan has to be either in company name of self-employed taxpayers name the medicare premiums paid by the not earning spouse cannot be claimed on line 29. Spouses medicare is in his/her name and cannot be considered to be part of the self-employed plan. This would not be the case if they were both working at the business and they split the profits then the other spouse would be able to deduct his/her premiums also.

[FEDUKE404]

Spouse stuff

At least under the current interpretation, if Mr. X is self-employed I see no reason why he cannot use both his own Medicare B and D premiums.

OTOH, if Mrs. X has similar Medicare B and D premiums (and thus pays them herself!) then I cannot see any way the premiums of Mrs. X could be used the for the self-employment medical adjustment of Mr. X. (Unless, of course, Mrs. X has her own Schedule C! Then there would be two sets of separate calculations/limitations.)

This is an entirely different scenario from a single medical policy that Mr. X carries, and that policy covers his wife and/or dependents. Those premiums are clearly eligible for the self-employment medical deduction within IRS rules.

FE

[appelman]

It may depend on how the spousal benefits are funded.

For example, my wife's social security benefits and medicare card are under MY social security number.

I must say I'm not entirely convinced that the IRS really has reversed itself on this, considering that the conventional wisdom within the Service has always tended to come down on the other side. I am thinking it may be a pleasant dream from which I shall soon be rudely awakened.

[FEDUKE404]

More confusion

For example, my wife's social security benefits and medicare card are under MY social security number.
...

Good grief - so whose name/Social Security number show up on the Form SSA-1099 each year?? If, from your description, it is your SSN then are you saying your wife receives NO Form SSA-1099 of her own but does receive benefits ?

(Not to sound dense, but how in the world do insurance claims for your wife go "through the system" if her Medicare account shows not her Social Security number but instead yours? )

FE

[appelman]

And a very good grief to U-2!

Her SSA-1099 shows HER SSN, but the benefits statements show MINE, with a suffix "B," as does her Medicare card. In both cases, it is designated "Claim Number." FYI, this is standard procedure when one spouse receives only spousal benefits based on the other spouse's account. The system handles it just fine, thank you. In my case it has done so without incident for the past decade.

[FEDUKE404]

Follow the money

Her SSA-1099 shows HER SSN, but the benefits statements show MINE, with a suffix "B," as does her Medicare card. In both cases, it is designated "Claim Number." FYI, this is standard procedure when one spouse receives only spousal benefits based on the other spouse's account. The system handles it just fine, thank you. In my case it has done so without incident for the past decade.

I don't have any reason to get into a verbal joust here, but it certainly sounds to me as if your wife "pays" the Medicare B premiums (a Form SSA-1099-SM I have on hand states "Medicare Part B premiums deducted from your benefits") and not you.

My only point is that if Medicare premiums can (depending upon which way the IRS wind is blowing) be used for the self-employment medical insurance adjustment, your wife's Medicare B or D premiums could not be used for your Schedule C adjustment as you did not pay them.

Or are you instead saying that you somehow paid your wife's Medicare B premiums while she is receiving Social Security benefits??

Apparently your account is being used as an internal justification/cross-reference for her benefits, not unlike what happens when a parent of an under-eighteen YOA child dies and the survivor(s) thus receive Social Security benefits. And, as I assume you already know, the child then receives his/her own Form SSA-1099. That sounds more like an internal SSA administrative matter than the tax issues raised on this board.

Regardless of the side issues you've raised, I would like to know what your justification would be for you to consider Medicare B premiums you did not pay in the first place.

Perhaps someone else can weigh in on this dilemma?

FE

[appelman]

You may be right...

But I just want to look at all the angles. It may not be strictly an administrative matter, since it does reflect the funding source for the benefit account. And what effect, if any, would being in a community property state have?

By all means, let's have some more input.

[S T]

Update

Spiedell just released this via email

IRS says Medicare Part B premium deductible as SE health insurance (2-11-11)
Unexpectedly, the IRS says the Medicare Part B premiums are deductible for purposes of the self-employed health insurance deduction. This is a reversal of their long-standing position, and it appeared in the instructions to Form 1040 without any other announcement. Spidell confirmed the IRS's new position by e-mail and you may view the e-mail at: http://www.caltax.com/spidellweb/pdf/medicareB.pdf.

________________________________________

Sandy

[FEDUKE404]

So the fat lady has apparently sung??

Well, well, well.

Common sense would have supported this conclusion all along, if you ever read "the rules" (boilerplate) as re-explained in the bulk of the memo.

The original problem was with the medical plan had to be "established in the name of the business" which became a bit difficult for many Sch C filers. That issue was (fairly) long ago resolved in favor of a Sch C owner being able to use premiums paid for his/her "personal" (including family) medical coverage.

Where the discussion later got sidetracked was with those who said Medicare premiums are "a tax" (in fact, the net monthly benefits received by the Soc Sec recipient are reduced by the Medicare B/D premiums being paid after attaining age 65) and/or those who would inappropriately apply the premiums paid by their spouse to their own Schedule C AGI adjustments.

Thanks for the news!

FE