Skip to content

July 27, 2012

Self-employed individuals may deduct their Medicare Premiums

Self-employed individuals can deduct Medicare premiums from their self-employment income.  Premiums paid by for the taxpayer, their spouse, dependents or children are deductible. The deduction is limited to the earned income of the entity that has a Medicare plan providing the coverage.  Sole proprietors, partners in a partnership, and 2-percent shareholders in an S corporation are employees for this purpose.

The deduction is not allowed for any month in which the self-employed person is eligible to participate in any subsidized health plan maintained by an employer of that person or their spouse.
The deduction is available whether a partner pays the premiums and is reimbursed by the partnership or if the partnership pays the premiums.

A self-employed person that did not deduct Medicare premiums for a prior year may file an amended tax return claiming the deduction.  .An amended tax return can only be claimed if the statute of limitations is still opened. 
The detectability of the Medicare Premiums was not clear prior to May 1, 2012.That is the date of the memorandum (number 201228037) from the Office of Chief Counsel Internal Revenue Service was issued. 
If you are not sure if you should file an amended tax return for an earlier year, contact your CPA or other tax return preparer.

Back to Top

Read more from Income Tax, etc.

Share your thoughts, post a comment.

You must be logged in to post a comment.