jo wrote:

- quote -

I have seen numerous anecdotal reports wherein taxpayers claim
the IRS told them that they could not claim the self-employed
health insurance deduction with respect to Medicare premiums
because either a) it is a government program and, therefore,
isn't established under or with respect to your business, or b)
it bears the taint of a subsidized employer plan, since roughly
half of the funding comes from employers.

There is nothing totally official on these points, but I'd say
that your intuition is right on track. This area comes down to
the question of how much risk you feel comfortable with.

MTW

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Your Medicare Part B and Medigap premiums are all deductible
under your business's "plan" to pay your health insurance
premiums, regardless of where you obtain the coverage. This
is just another trick of Congress and/or the IRs to confuse
an issue and refuse to clarify it. Logic: If you can't
deduct Mediare and Medigap premiums you are being
discriminated against due to your age because it is ILLEGAL
for an insurer to sell you a policy to replace Medicare. So
why would Congress pass this deduction for only under age 65
self employed people?

I use the free version of TaxAct but I also use my own
spreadsheet program and until they match I don't file. I
usually have to use one or more of the IRS fill-in forms for
printing something TA doesn't do.

ed

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There is no "physical connection " with your business with
any policy you might have or later "get". Your "Plan" is to
pay your premiums, not the actual policy. Don't confuse
your "plan" with a group "plan of insurance" for a business.
The wording is confusing and the IRS won't clarify it. An
individual can't purchase insurance under a company name so
why would our Congressmen design a deduction that is
impossible to achieve? And what gives TT the right to
prevent you from taking a deduction you are entitled to?
You won't be the first person that overrode their confusion.

I don't use a program to decide these things. I compute my
own tax and use IRS fill-oin forms.

ed

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I have no employees and no family. Insurance is strictly a
Medigap policy for me that went into effect last year. Thus
I see no connection with my business. I'd have it whether I
had a business or not. As for Medicare part B, I can't
remember where line 31 is, but TTax uses the figure in
calculating how much of your Medicare benefits are
taxable.Then it carries the part B amount also over to
Schedule A to a line under Medical deductions explicitly
labeled for it. If I include it in the healh insurance
deduction calculation allowed AND in the Schedule A
calculation, that seems to be double counting and the only
way I could avoid this was by manually overriding TTax to
enter a 0 on the Schedule A, which i'm sure will generate a
flag since it contradicts their easily verified information.

I'll have to go back to my printout t see which line you are
referring to, but I think I'll have to file an amended
return.

Thanks for continuing the dialog. What do you use for
filing now?

jo

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Your "Plan established under your business" is to pay
premiums for health insuracne for your family (and maybe
other employees). As such you can deduct your premiums up
to the amount of your net Schedule C. Medicare Part B and
any supplemental policy is O.K..

I don't know what TT's problems are, I don't use it anymore,
but I have been deducting part B premiums on line 31 for
over 10 years and never heard from the IRS.

ed

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ed wrote:

- quote -

Ed, I wasn't clear. I'm not deducting them from Schedule C.
It's just that when I get to that point of Schedule C (or
perhaps it's the interview process) in Turbo Tax, it takes
me off to a sub calculation which ends up on line 31 of
1040, which the remainder ending up on Schedule A. The
remaining questions are, a) what does the terminology of
"established under your business" mean in reference to the
health insurance and b) is Medicare Part B included? I
think that I now know the answer to (b): NO (but I can't
point to anything to back this up.. it's just intuition...
but the answer to (a) is going to determine whether I'm
entitled to any deduction at all and whether I have to amend
all my tax forms. What a PITA.

I was so exhausted Friday that I just sent in everything as
it was, with calculated amounts, just to get the postmark.
I'll fix it as soon as I find out what I really should be
doing.

PS
I seem to have had problems posting to the group so hope
this gets there instead of being rejected when it
inadvertently gets sent to you personally.

jo

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These are NOT Schedule C deductions. If you qualify you
deduct them on line 31 of form 1040, and then if that is not
possible for you you can deduct them as Medical Expense on
Schedule A.

ed

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I am on SSDI and Medicare but work just enough to have to
file a Schedule C. I'm having difficulty understanding how
to treat Medicare part B insurance costs because unless I
override the Schedule A line for it, it gets double counted,
once as part of the Schedule C health insurance calculation
and once in the Schedule A medical section. I can't find
anything in Turbo tax or online that addresses this
situation. If it makes any difference, I also have a
secondary insurance policy, which costs considerably more
than the Medicare part B. I'm assuming in doing the
Schedule C calculation I should be including both. Is that
incorrect?

Thanks,

jo

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