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How to deduct Medicare costs from your income tax

This article reprinted with permission of NerdWallet.

If you break down deductions on your income taxes, Medicare costs, such as premiums and copayments, may be deducted.

Your unreimbursed medical and dental costs, including premiums, deductibles, copayments and other Medicare costs, may be deducted to the extent greater than 7.5%. Your adjusted gross income. Premiums for Medicare Part B and Part D are usually deducted; Part A premiums are deductible under limited circumstances.

Other health care expenses may be deducted

Medicare recipients may incur a variety of medical expenses that their insurance does not cover, from long-term care to accommodation during a trip to medical care. Some of these costs may be tax deductible, within limits.

Read: How to pay for healthcare expenses in retirement

There are limits on the ability to deduct a long-term care premium. For tax year 2020, the maximum tax deduction for long-term care premium for people aged 61 to 70 years is $ 4,350 per person; for ages 71 and over, the limit is $ 5,430.

Also see: We have $ 1.6 million but most of it is locked in our 401 (k) plans – how can we retire early without paying too much tax?

Medicare Health Savings accounts can save tax

You can only use a Medicare Health Savings Account if you have a high deductible Medicare Advantage plan, which most people don’t. Money you deposit into the MSA (and any interest you receive) will not be taxed if you spend it on qualified medical expenses.

Even if you have such a plan, a Medicare MSA only makes sense if you are very healthy and you can pay the full deductible and any other out-of-pocket expenses if there are unexpected medical expenses. .

Consider seeking professional tax advice

Like most tax laws, deductibles for Medicare and other health care costs are complex. IRS Publication 502 Provides detailed information about medical expense deductions, but there is a lot more to be answered.

Also see: Trying to find the most tax-friendly place to retire? It’s not that simple

You also need to determine whether splitting deductions is your best overall tax strategy. Therefore, it’s best to consult a tax professional before claiming any deductions.

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John Rossheim writes for the NerdWallet. Email: [email protected]



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