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    Se medical ins deduction

    It is my understanding that a 67 year old schedule "C" filer (with no employees) can use his med-sup, part "B" and "D" premiums as an AGI medical insurance subtraction (assuming he has enough "C" net) . If he is MFJ, can he also use his wife's med-sup, part "B" and "D" premiums for this AGI subtraction ?

    #2
    From CCH's AnswerConnect:

    27,030 Determining the Types of Insurance That Qualify for the Deduction

    The deduction may be taken only for premiums paid for medical insurance, dental insurance, and qualified long-term care insurance. Moreover, the deduction may be taken only for premiums for insurance that covers the taxpayer, spouse, and dependents ( Code Sec. 162(l)(1); IRS Publication 535).

    The premiums paid for medical insurance and dental insurance are fully deductible ( Code Sec. 162(l)(1)(B)).

    All Medicare Parts are insurance that constitute medical care under Code Sec. 162(l). A partner or S corporation 2 percent shareholder-employee may pay the Medicare premiums directly and be reimbursed by the partnership or S corporation, or the premiums may be paid by the partnership or S corporation. In either case, the premiums must be reported to the partner as guaranteed payments or to the shareholder as wages and the partner or shareholder must report these payments as gross income on his or her Form 1040. A sole proprietor must pay the Medicare premiums directly ( CCA 201228037).

    If all the requirements of Code Sec. 162(l) are satisfied, Medicare premiums may be deducted for coverage of the self-employed individual's spouse, dependent, or child who is under age 27 as of the end of the tax year.

    Practice Tip

    Self-employed individuals who failed to deduct Medicare premiums for prior years may file an amended return to claim the deduction (subject to the statute of limitations).

    Comment


      #3
      Originally posted by FEDUKE404
      This specific question has previously been beaten to a pulp on these boards.

      Many folks say "no" and many folks say "yes."

      Suggest you use the search box (top right) for prior TTB discussions, which include necessary references, on the topic.

      FE
      The IRS instructions and Chief Counsel say it's allowed. In my opinion it would be unethical for a preparer to make the decision to not deduct it. At a minimum they should discuss with client that they are not taking a deduction for them that IRS says is allowed.

      Comment


        #4
        IRS Accepted It

        A year or two ago I filed 3 amended returns to add my spouse's Medicare B, D and Supplement to my SE Health Deduction. I carefully explained this on form 1040X to be sure the IRS knew exactly what I was doing. We got three refunds. Absolutely claim it.

        Comment


          #5
          Originally posted by FEDUKE404
          Oh well. Guess that means there are a lot of "unethical" preparers out there. . .n'est-ce pas?

          Obviously we cannot cite here any IRS publications, but Pub 535 does (continue to) carry this verbiage: "Medicare premiums you voluntarily pay to obtain insurance in your name that is similar to qualifying private health insurance can be used to figure the deduction."

          And the beat goes on.

          FE
          The IRS position on deduction allowance is quite clear: https://www.irs.gov/pub/irs-wd/1228037.pdf

          I stand by my opinion that if a preparer does not take the deduction based on memo not being precedent or whatever, that ethically they should disclose such to client.

          Comment


            #6
            Originally posted by FEDUKE404
            Oh well. Guess that means there are a lot of "unethical" preparers out there. . .n'est-ce pas?

            Obviously we cannot cite here any IRS publications, but Pub 535 does (continue to) carry this verbiage: "Medicare premiums you voluntarily pay to obtain insurance in your name that is similar to qualifying private health insurance can be used to figure the deduction."

            And the beat goes on.

            FE
            Where are you finding in the actual code that policy needs to be "in your name"?

            Comment

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