Medical Insurance Premium Deduction – Paul Gaulkin CPA

Doctor's Office TeamA medical expense deduction is allowed for premiums paid for medical care insurance, subject to a 7.5 percent limitation. If amounts are payable under an insurance contract for services that are not related to medical care, no amount paid for the insurance is deductible unless the medical care charges are stated separately in the contract or furnished in a separate statement.

Amount of Deduction

Long term health care insurance premiums are deductible, for 2012, the maximum deduction for prepaid long term care insurance premiums is $350 for an individual age 40 or younger to $4,370 for an individual who is over the age of 70.

Medicare Part A & B

The basic cost of Medicare Part A insurance is not deductible unless voluntarily paid by the taxpayer for coverage. However, the cost of Medicare Part B is deductible because it is considered additional Medicare coverage and not the bare minimum.

Self Employment

Self employed persons are allowed to deduct 100 percent of amounts paid for health insurance for herself, her spouse, her dependents, and her under 27 year old children as a business expense which should be deductible for adjusted gross income.

When to Take Deduction

Medical expenses are deductible only in the year paid. If medical expenses are reimbursed under a medical care insurance plan in the same year as paid, then the reimbursement merely reduces the amount that would otherwise be deductible. If the reimbursement was received for medical expense in a year subsequent to a year in which a deduction was claimed, the reimbursement must be included in gross income in the year received to the extent attributable to deductions allowed in the prior year.

About Paul Gaulkin CPA

Paul Gaulkin is a Certified Public Accountant and enrolled with the U.S. Treasury to practice before the IRS. Mr. Gaulkin possesses unique technical knowledge in the process of securing relief for taxpayers nationwide with IRS and State tax problems. With an accounting degree from Florida International University, he is able to transform complex tax and accounting problems into easy to understand solutions.


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