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New Deduction for Medicare Premiums

Sole proprietors, partners, limited liability company (LLC) members, and S corporation shareholders can deduct qualified health insurance premiums paid to cover themselves and family members. This is the so-called self-employed health insurance deduction.

For 2010, you claim it on Line 29 on Page 1 of Form 1040. Because it’s an above-the-line deduction (meaning a deduction claimed on Page 1), you don’t have to itemize to benefit.

Medicare Part B Premiums Suddenly Count as Qualified Expenses

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For years, the IRS had taken the position that Medicare Part B premiums did not count as qualified health insurance premiums. This was bad news if you are an older small business owner because your Medicare Part B premiums for 2010 could range from about $1,300 to over $4,200, depending on your income. If you are married, your spouse’s premiums could be in the same range. So we can be talking about major bucks.

Now for the good news: with no fanfare, the IRS suddenly reversed course on the Medicare Part B premium issue. We know this because the 2010 instructions for Line 29 of Form 1040 explicitly allow you to include Medicare Part B premiums in your health insurance costs for purposes of the self-employed health insurance deduction.

Make sure you (or your tax preparer) take the new taxpayer-friendly IRS attitude into account when putting together your 2010 return. The additional Line 29 write-off could lower your federal income tax bill by hundreds of dollars or more.

It’s a Double Tax-Saver!

As a bonus, you can subtract your self-employed health insurance premiums (the amount claimed on Line 29 of Form 1040) from self-employment income when calculating your 2010 self-employment tax bill. So the additional Line 29 deduction for Medicare Part B premiums could lower your self-employment tax bill by a significant amount as well as your federal income tax bill. It’s a double tax saver!

What about Medicare Part C and D Premiums and Medigap Premiums?

The IRS still says nothing about whether you can include premiums for Medicare Part C coverage (for so-called Medicare Advantage HMO-type coverage) or premiums for Medicare Part D coverage (for prescription drugs) in your deduction for self-employed health insurance premiums. The IRS also says nothing about premiums for Medicare supplemental insurance policies (for so-called Medigap coverage). It would be nice if the government would take an updated stand on all the Medicare insurance premium issues at one time instead of issuing piecemeal guidance.

The Bottom Line

What I’ve told you here is all good news, but I would love to hear what any tax pros who read this think about the Medicare Part C and D and Medigap premium question. Will you deduct these premiums on Line 29 of your client’s 2010 returns? What about those of you who will be preparing your own returns? Readers: please weigh in.

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      Disapearing Missions in LOG Window Customer Service
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      STAR WARS: The Old Republic – Disapearing Missions in LOG Window
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      Disapearing Missions in LOG Window
      STAR WARS: The Old Republic
      > English
      > Customer Service
      Disapearing Missions in LOG Window
      Rate This Thread:
      5 : Excellent
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      1 : Terrible
      Reply
      sandmanusd
      12.14.2011
      , 11:25 PM
      | #1
      Quote
      So I was able to download the game and play… And at first I had the missions listed as usual up in the top right of my screen and in the "Log Menu (L)"…
      But all of a sudden, upon logging in, the missions are no longer visible. They are still listed in the LOG menu,
      IE: Missions 4/25
      but there is nothing there, you can’t see the actual missions and there are just tabs to track and untrack the mission… and if you kill something associated with the mission, you still get the update, but its just not listed anywhere.
      I can still see the green icons on the mini map to indicate where I need to go for the mission, and I can hover over those icons and it tells me which Mission its associated with, so I know I am on the mission, but its not listed.
      This morning, when I first got the invite, I ran the patch / repair and it flew through without a hitch…
      Now when I run that again, it starts to download a 11 GB file…
      Anyone else having this issue?
      sandmanusd
      12.14.2011
      , 11:34 PM
      | #2
      Quote
      img408.imageshack.us/img408/1…1121421281.jpg
      Sorry I don’t know if I can post a direct picture here, or how to do it,
      but if you follow that link to my screen shot, You can clearly see what I’m talking about…
      In the "Log Window" you can see that it states 3/25, and has the icon to toggle "tracking" of the mission and even has the number of items I need to still get for that mission, but nothing else is visible…
      LawLessOne
      12.14.2011
      , 11:41 PM
      | #3
      Quote
      That is pretty weird. I would let it patch because something is obviously messed up with your install. If that doent fix it then you might want to uninstall and reinstall the game.
      sandmanusd
      12.14.2011
      , 11:47 PM
      | #4
      Quote
      Quote:
      Originally Posted by LawLessOne
      That is pretty weird. I would let it patch because something is obviously messed up with your install. If that doent fix it then you might want to uninstall and reinstall the game.
      Yeah, i was thinking of just doing that, but its downloading a 12 GB file to "patch" it…
      is that normal?
      I have submitted a ticket over this, as its obviously some sort of bug / glitch / problem…
      As I said, I had a perfect install earlier today, and could see the Missions just fine, and logged out and back in, and POOF… problem requireing a 12GB download..
      I’m baffled
      Reply
      STAR WARS: The Old Republic
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    • Do you have to be over 65 to claim medicaire tax as a self employed health insurance deduction?

    • Howdy! This is my 1st comment here so I just wanted to give a quick shout out and tell you I truly enjoy reading through your posts. Can you suggest any other blogs/websites/forums that deal with the same topics? Thank you so much!|

About The Tax Blog

  • The Tax Blog brings together a team of award-winning tax journalists from the Dow Jones network and around the web to examine the tax issues, changes and legislation that affect families, investors and small business owners. Our contributors include Tax Report columnist Laura Saunders (WSJ), Tax Guy columnist Bill Bischoff and senior reporter Jilian Mincer (SmartMoney.com), retirement-focused reporter Anne Tergesen (WSJ), wealth management writer Arden Dale (Dow Jones Newswires), TaxWatch columnist Eva Rosenberg and personal finance reporter Andrea Coombes (MarketWatch), and reporter Alyssa Abkowitz (SmartMoney). They’ll provide the latest news and insight, mine the tax code for tips and loopholes, and answer your questions about tricky tax situations. Contact the The Tax Blog with ideas, suggestions or tax questions at thetaxblog@dowjones.com.

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