Monday, January 17, 2011

Can I deduct my medicare premiums?

Generally, medical insurance premiums including certain Medicare premiums are deductible on your Federal Income Tax if you are itemizing your deductions using Schedule A, Form 1040.

There is a limitation placed on deductible medical expenses. You can only deduct the amount of your qualified medical expenses that exceeds 7.5% of your adjusted gross income for the year.

Here is an example. You have an adjusted gross income for the year of $47,000, 7.5% of that is $3525. If you have $4000 of qualified medical expenses, $475 of that amount would be the medical expense deduction.

IRS Publication 502 is the publication that covers the rules about medical and dental expense deductions.

Here is what it has to say about Medicare Premiums:

Medicare A
If you are covered under social security (or if you are a government employee who paid Medicare tax), you are enrolled in Medicare A. The payroll tax paid for Medicare A is not a medical expense.

If you are not covered under social security (or were not a government employee who paid Medicare tax), you can voluntarily enroll in Medicare A. In this situation you can include the premiums you paid for Medicare A as a medical expense.

Medicare B
Medicare B is a supplemental medical insurance. Premiums you pay for Medicare B are a medical expense. Check the information you received from the Social Security Administration to find out your premium.

Medicare D
Medicare D is a voluntary prescription drug insurance program for persons with Medicare A or B. You can include as a medical expense premiums you pay for Medicare D.

If you are itemizing your deductions, the premiums you pay for Medicare B and D can be included. The premiums for Medicare A are usually not deductible unless you meet the conditions shown above.

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