If you’re nearing the age for Medicare eligibility, there are some things you should know about Medicare. One of those things is whether Medicare premiums are tax-deductible. You want to ensure you file your taxes correctly, but you also want to be certain you take advantage of every deduction available to you. Let’s break down what Medicare tax deductions you can take, what expenses aren’t deductible and other things you should consider for your taxes.
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Can You Deduct Medicare Premiums?
Yes, Medicare premiums are tax deductible as a medical expense as long as you meet two requirements. First,you must itemize your deductions on your tax return to deduct them from your taxable income. Second, only medical expenses that exceed 7.5% of youradjusted gross income (AGI)are deductible.
Let’s break that down a bit. By itemizing your deductions, you’re forgoing the standard deduction in favor of listing your deductible expenses. If you have enough deductible expenses, this can improve your standing at tax time. To do this, you’ll need to keep receipts and records to prove the expenses.
If you have an AGI of $60,000, for example, you’ll be able to deduct any medical expenses that exceed $4,500. That first $4,500 isn’t deductible. So, if you have $7,500 in medical expenses — including Medicare premiums — only $3,000 is deductible.
Are Medicare Premiums Tax Deductible If You’re Self-Employed?
Yes, they are. If you’re self-employed, you may not have to meet the mark of having 7.5% of your AGI go to medical expenses. That includes whether you’re fully employed, or if you’re retired and doing some consulting or freelancing on the side.
To qualify for the deduction, neither you nor your spouse may be eligible for health insurance through an employer. This deduction includes any premiums you pay with Medicare parts A, B, C and D, as well as Medicare Advantage and Medigap premiums. You claim this deduction on Schedule 1 when filing Form 1040.
What Other Medicare Expenses Are Tax Deductible?
Even if you receive Medicare, you may be facing a variety of medical expenses that Medicare doesn’t cover. Along with Medicare premiums, some of these medical expenses are tax deductible. Costs like long-term care, transportation for appointments and home improvement changes you’ve had to make due to a disability can be tax-deductible. Here are some other out-of-pocket expenses that you can deduct:
- Dental care:Co-pays, extractions, fillings and any other dental expenses can be deductible.
- Ear and eye care:Glasses, contacts, hearing aids, eye and ear exams and more can be deductible.
- Medical equipment:Walkers, wheelchairs, braces and any other sort of equipment you need can be tax deductible.
- Mental health:Psychiatric care, psychoanalysis and therapy for medical treatment can be a tax-deductible medical expense.
- Chiropractic services, vasectomies and more:The IRS’ list of tax-deductible medical expenses is fairly comprehensive. If you think the expense qualifies, do some research.
Remember that these expenses combined will have to make up over 7.5% of your AGI to be deductible.
Are There Medicare Expenses You Can’t Deduct?
While Medicare premiums and many other medical expenses are tax deductible, the IRS has a short list of medical expenses that don’t qualify for the deduction. These include:
- Cosmetic surgery
- Hair transplants
- Electrolysis, or hair removal
- Nonprescription drugs, such as supplements and vitamins
- Drugs bought internationally
- Personal hygienic items
- Teeth whitening
- Gym or health club fees
- HSA contributions
Bottom Line
As you get older, the chances are that you’ll have more medical expenses. While this isn’t exactly great news, there is a small upside in that you can deduct medical expenses that exceed 7.5% of your AGI. That includes Medicare premiums, as well as many other common expenses. To make the most of your taxes, you need to itemize your deductions and present proof of the expenses in the form of receipts.
Tips for Getting the Best Tax Deduction
- Deductions are a complex part of the U.S. tax code. Depending on your profession, your lifestyle and how you file, you may be able to claim different deductions. A financial advisor can walk you through these deductions. Finding afinancialadvisor doesn’thaveto behard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- When planning for your taxes, it helps to have an idea of what you’re in for. If you want to estimate how much you’ll pay in taxes, check out our income tax calculatorto see how federal and state taxes may impact you.
- If you’re eligible for Medicare, chances are you’re retired or hoping to retire soon.Ourretirement calculatorcan help you determine your estimated Social Security benefits, how much savings you need to retire and how much extra income you’ll need in retirement.
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FAQs
Yes, Medicare premiums are tax deductible as a medical expense as long as you meet two requirements. First, you must itemize your deductions on your tax return to deduct them from your taxable income. Second, only medical expenses that exceed 7.5% of your adjusted gross income (AGI) are deductible.
Are Medicare premiums deducted from Social Security benefits taxable? ›
Are Medicare premiums and Social Security benefits taxable? Monthly premiums and out-of-pocket costs of Medicare programs are tax-deductible. When a person has a high accumulation of medical expenses, they may wish to itemize them on their tax return.
Can I deduct Medicare Part B premiums on my taxes with TurboTax? ›
Yes, you can deduct your Medicare premiums as part of your medical expenses, if you itemize. TurboTax will do this automatically, just enter your Medicare premiums when you enter your Social Security benefits, on the SSA-1099 screen.
Are health insurance premiums tax deductible for retirees? ›
Health insurance premiums can be tax deductible when you retire, but it depends on several factors such as your age, the type of health insurance plan that you have and whether you are self-employed or not.
Are supplemental insurance premiums tax deductible? ›
Is Supplemental Health Insurance Tax Deductible? Supplemental health insurance premiums, like hospital indemnity insurance and critical illness insurance, are generally tax deductible, but only as a qualified medical expense.
Can I deduct my Medicare premiums on my tax return? ›
Yes, Medicare premiums are tax deductible as a medical expense as long as you meet two requirements. First, you must itemize your deductions on your tax return to deduct them from your taxable income. Second, only medical expenses that exceed 7.5% of your adjusted gross income (AGI) are deductible.
At what age is Social Security no longer taxed? ›
Social Security income can be taxable no matter how old you are. It all depends on whether your total combined income exceeds a certain level set for your filing status. You may have heard that Social Security income is not taxed after age 70; this is false.
Can you deduct Medicare Part B premiums if you are self-employed? ›
The IRS has ruled that Medicare recipients who have self-employment income may deduct the premiums they pay for Medicare coverage, the same as the premiums for any other type of health insurance. Medicare Part B premiums are about $100 per month, so this deduction can really add up.
Is Medicare B Premium deductible? ›
“Premiums for all Medicare Parts (A, B, D, Medicare Advantage, and Medigap) are tax-deductible, but there are some rules about who is paying, who is covered, and where the deduction is allowed,” says Mark Seid, CPA, USTCP, instructor at Western CPE.
Can I write off my health insurance premiums? ›
If you pay for health insurance before taxes are taken out of your check, you can't deduct your health insurance premiums. If you pay for health insurance after taxes are taken out of your paycheck, you might qualify for the medical expense deduction.
If you're married, filing jointly or separately, the extra standard deduction amount was $1,500 per qualifying individual. If you are 65 or older and blind, the extra standard deduction for 2024 is $3,900 if you are single or filing as head of household.
At what age do seniors stop paying federal taxes? ›
Taxes aren't determined by age, so you will never age out of paying taxes. Basically, if you're 65 or older, you have to file a return for tax year 2023 (which is due in 2024) if your gross income is $15,700 or higher.
How much money can a 70 year old make without paying taxes? ›
If you are at least 65, unmarried, and receive $15,700 or more in nonexempt income in addition to your Social Security benefits, you typically need to file a federal income tax return (tax year 2023).
What types of insurance premiums are tax deductible? ›
Self-employed taxpayers and other business entities can deduct business-related insurance premiums, including health and dental insurance premiums and long-term care premiums. 8 Vehicle insurance can also be deducted if the taxpayer elected to report actual expenses and is not taking the standard mileage rate.
Is homeowners insurance tax deductible? ›
Some taxpayers have asked if homeowner's insurance is tax deductible. Here's the skinny: You can only deduct homeowner's insurance premiums paid on rental properties. Homeowner's insurance is never tax deductible your main home.
Is it worth claiming medical expenses on taxes? ›
Normally, you should only claim the medical expenses deduction if your itemized deductions are greater than your Standard Deduction (TurboTax can also do this calculation for you). If you elect to itemize, you must use IRS Form 1040 to file your taxes and attach Schedule A.
Do I have to pay Medicare tax if I am collecting Social Security? ›
Do you pay Medicare taxes on your social security income? Mostly, you don't pay Medicare tax on retirement benefits or investment income. Medicare taxes are lumped under the Federal Insurance Contributions Act or FICA. FICA (and Medicare taxes) apply only to earned salary or wages, not retirement income.
Does the SSA 1099 box 5 include Medicare premiums? ›
Do they count as income? No, Medicare B premiums don't count as income, per se. However, the amount in Box 5 of your Form SSA-1099 – including Medicare B premiums, if present – is used in the computation of the taxable Social Security amount included on your return.
Is Medicare tax deducted from taxable income? ›
The Medicare tax is one of the federal taxes withheld from your paycheck if you're an employee or that you are responsible for paying yourself if you are self-employed.
How much of my Social Security income is taxable? ›
Substantial income includes wages, earnings from self-employment, interest, dividends, and other taxable income that must be reported on your tax return. Between $25,000 and $34,000, you may have to pay income tax on up to 50% of your benefits. More than $34,000, up to 85% of your benefits may be taxable.
