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Medicare CPA explains how to deduct Medicare Premiums as Self Employed Health Insurance on Line 29 of Form 1040 2012

Medicare CPA discusses self employment insurance deduction

Gary Bode, CPA: Many retired folks make money from hobbies. Now your Medicare Premiums can offset that income. For a free phonce conuslt call (910) 399-2705.

Your Social Security Benefit Statement, Form SSA-1099, shows deductions in Box 3 for various Medicare premiums. Medicare CPAs have long-held that Medicare is Self Employed Health Insurance and therefore deductible on Line 29 of Form 1040. And now the IRS finally agrees. An article in the Journal of Accountancy, on 7/16/2012, states the IRS Chief Counsel Advice (CCA) clarified this issue.

“Many folks run self employment businesses after they begin receiving Medicare benefits. Now you can deduct Medicare payments as a cost to offset that self employment income.” 
– Gary Bode Medicare CPA

But my CPA already deducts Medicare Payments as Medical Expense!

Sure and you had to until now. But this is problematic:

  • The medical expenses part of Schedule A (itemized dedutions) has a 7.5% adjusted gross income threshold. So if you had $50,000 of income, the first $3,750 of medical expense didn’t help lower your taxes.
  • The total of all the Schedule A Itemized Deductions has to exceed the IRS Standard deduction for it to decrease your taxes.
  • Many retired folks don’t exceed the IRS Standard Deduction until their health deteriorates.

Ask your Medicare CPA if any of your income allows deducting your Medicare premiums as self-employed health insurance.

What’s a Medicare CPA? A CPA with retired clients. Usually these folks have moderate to complex tax returns outside the scope of the tax chains or do it yourself software. Want a free phone consult? Just call (910)399-2705. We maintain a virtual office to accommodate long distance clients. Local client like the added convenience.

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