Can I deduct spousal Medicare premiums deducted from her Social Security as a business expense on my Schedule C?

[JD028]

I see that premiums for yourself, spouse children, etc. can be deducted if YOU pay for them. I am not paying for them if they are deducted from a spouses Social Security.... yet the situation is not clearly addressed in any reference I have found. What would you do?

[jeffmcpa2010]

When you look at your year end social security form how does box 5 compare to the amount you actually received?

If you analyze the situation you may conclude that you DID pay them through withholding of your income.

[JD028]

Thank you for your response. Yes...mine...I did pay for. The question is can I claim the amount my spouse had deducted for Medicare from HER social security on my Schedule C (in which activity she does not participate)? I am torn in between the fact that if I paid for family Blue Cross, for instance, the guidelines seem clear cut that I can claim that, but all I have read on Medicare states that "YOU paid for". Semantics perhaps and likely a reasonable conclusion that "we" are "you".

Any further thoughts?

[jeffmcpa2010]

I don't think so. I believe that what I remember from CPE a few years ago is family members only if they are covered on YOUR policy.

I don't believe WE are You.

For instance - If your wife paid to have you covered on her insurance through her employer, I am pretty sure the IRS position is that can not be claimed as self employed health insurance.

[qbteachmt]

Here is a reference and always note the date on these articles:

https://www.healthinsurance.org/faqs/im-self-employed-can-my-husband-deduct-his-medicare-premiums/

"A. Yes. In 2012, the IRS ruled that Medicare insurance premiums can be counted. Under the ruling, Medicare premiums covering the self-employed individual – as well as his or her spouse, dependents, and under-age-27 children – are deductible."

[qbteachmt]

Here's another, more recent, and better written, since it includes itemizing as well:

https://www.medicareresources.org/faqs/can-i-deduct-my-medicare-premiums-on-my-tax-return/

[JD028]

Thank you. I have read both those articles and maybe a couple others. LOL...is it me or do these seem to come to different conclusions?

It seems illogical to me that one spouse's Medicare deducted from their own Social Security should be reportable by the other, self-employed, spouse.....but including it results in a much better refund and I do know of people who do so. Of course that does  not make it right.

[BobKamman]

Illogical?

You're not from around here, are you....

[sjrcpa]

I assume you are talking about the self-employed health insurance deduction and not a Schedule C deduction.

[qbteachmt]

"It seems illogical to me that one spouse's Medicare deducted from their own Social Security should be reportable by the other, self-employed, spouse."

There have been many change I chalk up to attempts at parity. Once the ACA happened, many other things were modified to try to provide an equitable playing field. The government requires the over-65 to be on Medicare, and that is always independent and in the name of the individual. Yet, the business expense and tax deduction provisions want to provide equitable consideration to all, whether you are on the Marketplace, covered "at work" and whether the plan is Individual, Family, etc.

The whole "Deducted from their own Social Security" simply means: the government is doing the banking for me, and taking the payment. It isn't really post-tax or pre-tax, because now you venture into how and why that specific SS gross is or is not taxable as a mutliple-dependency analysis. That's too deep for me.

[qbteachmt]

"I assume you are talking about the self-employed health insurance deduction and not a Schedule C deduction."

Oh, good point. A lot of times this is put in the wrong place.

[JD028]

.....and herein lies the dilemma.....though out answers seemingly offer two paths. 

Thank you all for your input.

[JD028]

Yes I am.

[qbteachmt]

"seemingly offer two paths."

This?

On the Sched C, you list Expenses, which would include Health coverage for Employees. The Sole Proprietor's own costs are not an itemized deduction on the Sched C.

"Line 14

Deduct contributions to employee benefit programs that are not an incidental part of a pension or profit-sharing plan included on line 19. Examples are accident and health plans, group-term life insurance, and dependent care assistance programs. If you made contributions on your behalf as a self-employed person to a dependent care assistance program, complete Form 2441, Parts I and III, to figure your deductible contributions to that program.

You cannot deduct contributions you made on your behalf as a self-employed person for group-term life insurance.

Do not include on line 14 any contributions you made on your behalf as a self-employed person to an accident and health plan. However, you may be able to deduct on Schedule 1 (Form 1040), line 17, the amount you paid for health insurance on behalf of yourself, your spouse, and dependents, even if you do not itemize your deductions. See the instructions for Schedule 1 (Form 1040), line 17, for details.

You must reduce your line 14 deduction by the amount of any credit for small employer health insurance premiums determined on Form 8941. See Form 8941 and its instructions to determine which expenses are eligible for the credit."

https://www.irs.gov/instructions/i1040sc