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Self Employed Health Care Deduction--Are Payments for Medicare Included?

For 2010 the instruction book for Form 1040 (at page 29 for Form 1040 Line 29) clearly says Premiums paid for Part B Medicare ARE included for purposes of the Self Employed Health Care Deduction.

For 2009 returns the instructions (at page 31 for Line 29) just as clearly state that premium payments for Medicare are/were NOT included for purposes of the SE Health Care Deduction (they could be deducted on Schedule A but subject to the AGI exclusion).

Has the law changed in this regard from 2009 to 2010? Was the 2009 information in the booklet incorrect or is the 2010 year information incorrect?

The reason I ask is that I cannot find any reference to any such change in the "What's new for 2010" section of the Form 140 instruction booklet or in Pub 17.

I did not include it in the SE Deduction computation for 2009.

Thanks for any responses.

Reply to
Michael
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They are both correct. This was a one-shot change, just for 2010.

Reply to
Rich Carreiro

Not a one-shot change. The Treasury back pedaled on this issue and stated (I don't have the cite.) that the premiums could be included. They even said that you could go back and amend prior year returns.

See Pub 535 for the general public instruction.

Reply to
Alan

Allowing Medicare B premiums to be included on Line 29 is not a one-shot change and you can amend open years to add Medicare B to line 29. That's the result of an IRS Chief Counsel conclusion.

However Rich might be saying that line 29 reducing Schedule SE line 3 SE income is, indeed, a one-shot change.

Reply to
Arthur Kamlet

Agreed. I remember seeing that here and on the tax mailing list over at Yahoo!.

That is what I was saying. And shame on me for not reading the OP closely enough since as the rest of you pointed out, he was asking about Medicare B premiums and 1040 line 29.

Reply to
Rich Carreiro

For those of you who like to read technical explanations.... see the KPMG analysis of this change and its background:

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Reply to
Alan

NO SHAME RICH, OTHERS NOTHING BUT THANKS

But YIKES!!! Self Employment (net) income itself on Schedule SE may ALSO be reduced by Medicare payments (and/or other self employed health payments)? For 2009 (and other open years) as well as the current (for me) 2010 tax year?

You guys answered my Line 29 question but I'm still a bit confused about the (possible) applicability of SE medicare/other health insurance to other schedules or attachments to my Form 1040/Schedule C.

Sorry to keep asking follow up questions but I'm trying not to leave the medicare and/or other self employed health payments off my return for 2010 as I did for 2009. But can medicare/other SE health reduce net gain from self employment income too? I did not see a line for that on Schedule SE (might have overlooked it).

Does a completely updated version of Pub 535 clearly address these areas of my ongoing confusion?

Past and anticipatory future thanks.

Reply to
Michael

Two different issues.

  1. Can Medicare B qualify for Line 29 SE Health deduction?

Yes, it can qualify and you can amend open years if applicable.

  1. Is there a one-year only 2010 reduction of Schedule SE line 3 by the Form 1040 Line 29 amount?

Yes, see Schedule SE instructions for line 3.

Reply to
Arthur Kamlet

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