Kamis, 30 Oktober 2014

The IRS Permits Self-Employed Seniors to Deduct Medicare Part B

The IRS Permits Self-Employed Seniors to Deduct Medicare Part B

In the 2010 tax season, the IRS allowed, for the first time, self-employed individuals to deduct Medicare Part B premiums. This was the first time that self-employed seniors were allowed to make such deductions. Prior to this, the IRS did not allow the premiums to be claimed for deductions. However, this new rule was set early 2011 and was not publicized (as the IRS's routine). Instead, it was just included in Form 1040 for the 2010 tax return season. The new rule is also contradicting with the "Business Expenses Publication 535" that specifically states that deducting Medicare Part B premium-payments is prohibited. However, a statement from the IRS requests taxpayers to ignore the statement on Publication 535 and instead, make the deductions as per the new Form 1040. The self-employed health insurance includes all the health insurance premiums paid for owners of single-owner businesses, partnerships, S-type corporations, and limited liability companies (LLC).

How to Put the Deductions into Effect

The deduction is specifically provided for on Line 29 of Form 1040, "Standard Tax Form". Since the deduction appears on the first page of the tax return form, you do not need to indicate the deduction as an itemized deduction.

Welcome Addition

Many small-business owners find this new inclusion into the Form 1040 as a great savings, as Medicare for self-employed individuals could run to about $4,500.00. If you include coverage for spouse and family, the amounts could run really high. Therefore, even as a late-inclusion tax break, most qualifying individuals find this as quite a deal.

The Healthcare is Deducted Two Times

Did you know that you can deduct this premium cost twice? Since Healthcare costs are an allowable expense for businesses, it means that you deduct the cost of Healthcare in your taxable business income. Therefore, the expense is already removed before indicating the income on your tax returns. Then, as a further tax benefit, the same Healthcare premiums cost is then deducted again on Line 29 of the Standard Tax Form. What a deal!

What about Medicare Part C and Part D?

Unfortunately, since there was no formal announcement on the inclusion of Part B Healthcare premium deductions, the IRS remains silent about Part C and Part D Healthcare premiums konsultan pajak jakarta. Part C is for self-employment Healthcare premiums for Medicare Advantage HMO insurance while Part D is prescription drugs for self-employed coverage. There is also no communication about the Medicare Supplemental Insurance products (Medigap). Hopefully, as the IRS provides a more formal announcement about the new Line 29 inclusion in the Form 1040, they will give clear guidelines about how to handle all types of self-employment Healthcare plans.

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