Medicare as SE Health Ins Deduction

[RLymanC]

The IRS has given the go-ahead to amend prior returns to include Medicare premiums for purposes of the self-employed health insurance deduction. (IRS Publication 535) The publication also clarifies that the deduction is available for all Medicare premiums (such as Part D), and not just Part B premiums as stated in the instructions to Form 1040.

For most taxpayers, the statute of limitations for refunds for 2007 expires on April 18, 2011, so time is of the essence for those returns.

[JG EA]

I did a search today (just 2007) and only one out of quite a list would benefit! And it would be a $5.00 savings. So I figure - not too cost effective for the client and I certainly don't feel responsible for this.

[Bees Knees]

We followed the rules as presented to us at the time. The 2009 version of Pub 535 made it clear that Medicare Part B did NOT qualify for the self-employed health insurance deduction.

Thus, if IRS wants to do a reversal and now claim it DOES qualify, it isn't my fault. Client would have to pay full price to have me amend a prior return over this issue.

[JON]

I think

it is a good savings in small C's in a higher bracket because of other income with savings of SE Tax, Fed income tax and state income tax that can get to a 40% of the premiums. So you can get a few that it may work???? Software has to do it first.

[DaveO]

it is a good savings in small C's in a higher bracket because of other income with savings of SE Tax, Fed income tax and state income tax that can get to a 40% of the premiums. So you can get a few that it may work???? Software has to do it first.

The IRS isn't allowing Medicare as a deduction against SE tax in the prior years only as an adjustment to income, right? As I understand the SE tax deduction is 2010 only.

[Davc]

The IRS isn't allowing Medicare as a deduction against SE tax in the prior years only as an adjustment to income, right? As I understand the SE tax deduction is 2010 only.

Correct.....