If you buy medical insurance in the marketplace, I realize that the premium is considered a medical insurance expense for medical deductions, like any private premium would. What I'm wondering is, if you have to pay the ACA shared responsibility payment because you didn't have insurance, is THAT payment considered a medical expense for Schedule A? If it is, which year is that an expense, when it is paid?
When SCOTUS ruled that the ACA was constitutional, they did so on the basis that the penalty is a tax. You don't get to deduct federal taxes on your federal taxes.
And what medical benefit do you get from paying that, anyway?
You don't get to deduct federal INCOME TAXES on your federal income tax return. But is that true of ALL federal taxes?
Perhaps not. But as I understand it that "tax" is more a fine assessed under the tax code rather than a tax itself. Fines imposed by the government are never deductible.
The Supreme Court said it was a tax, although it was enacted as a fine and we all know it is a fine. So, if it helps me on my income tax return, it is a tax.
Since my health insurance premiums are less than the fine, er, tax, would be, I guess my health insurance premiums are deductable as a non-income tax. Maybe?
The direct answer to your question is: No, it is not a deductible medical expense.
The last time I looked, there were 6 states that allowed a tax deduction on the state income tax return for federal taxes paid. One would have to look at the tax law in those six states to see if the individual shared responsibility payment is included in the definition. I am familiar with Alabama, and it is not included in deductible federal taxes. The other five states are Iowa, Louisiana, Missouri, Montana and Oregon.
Whether the argument of that it is cheaper to pay the tax than to purchase insurance can be considered "production of income" (by selecting the lower expense) is beyond my analysis.
As to which year it is an expense of, that depends on your accounting method. As most individuals do not keep formal accounts, such will devolve into the year paid (assuming a deduction is otherwise permitted).
I see no federal deduction here. As noted in another reply, some states may allow it for state income tax purposes.
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