Many people wonder if they can deduct Medicare on their income taxes. So is it possible? To a certain extent, yes. As you will see in the following article, premiums, deductibles, copays and other non-refundable expenses may be subtracted from the amount you will report on your taxesbut only if they exceed 7.5% of AGI (that is, adjusted gross income).
- 1 Can I deduct Medicare from my taxes?
- 2 How to save on taxes with Medicare?
- 3 How much can I deduct from Medicare on my taxes?
- 4 Tip: Seek professional help from an experienced accountant
Can I deduct Medicare from my taxes?
What does Medicare Part B cover?
By way of illustration, Medicare Part B is the one that covers outpatient treatments, doctor visits, regular immunizations, lab tests, and other diagnostic testssuch as imaging.
What does Medicare Part D cover?
Medicare Part D, reserved for patients who are entitled to Part A or those who have access to Part B, is the one that covers prescription drug costs. Remember that this plan works with an annual deductible and that you will also pay a small rate (5%) when paying for the medicines.
What is Medicare Part A?
Medicare Part A is the most common (and best known) by Americans. This section covers the hospital care, that is, the expenses that the patient will incur when hospitalized. However, the amount of medical fees is not covered.
What other Medicare expenses can be tax deducted?
As you may already know if you have a Medicare health policy, not all medical expenses are covered by the program. Some examples? Caring for a patient at home or long-term or lodging in another state when traveling for special medical treatment.
Some of these expenses – which the patient will have to pay directly – may be tax deductible, at least as long as they stay within certain limits.
What are the limits within the Medicare deductibles? Well, the amounts are adjusted every year. For tax year 2020, the maximum deduction is as follows:
- Expenses incurred for long-term care care for the elderly (ages 61 through 70): $4,350 per person.
- Expenses incurred for long-term care care for the elderly (over 71 years of age): $5,430 per person.
How to save on taxes with Medicare?
The money you put into your MSA—and any interest you earn on it—is not taxable.as long as you spend the money on qualified medical expenses.
Now, remember that a Medicare MSA is only beneficial if the insured 1) is in good health and 2) you have enough money to pay the full deductible. To this should be added, in addition, that the insured will have to pay any surprise expenses out of his pocket.
Note: Even the purchase of birth control pills, maternal supplies, breast pumps, braille books, bandages and the placement of dental implants can be deducted from your taxes.
How much can I deduct from Medicare on my taxes?
According to the IRS, on Schedule A you can deduct medical and dental expenses that exceed 7.5% of adjusted gross income. These expenses include all those you pay out of pocket, as well as those you pay to someone who depends on you or who has a close relationship with you, that is, your spouse or a dependent.
as dependent, the IRS includes qualifying children and relatives (siblings, grandparents or any other person other than the spouse who depends on the taxpayer and who has lived with him during the entire tax year) and adopted children (provided they live with the adoptive parents for the entire tax year), provided that:
- Have not filed a joint return for the year 2020.
- Have not received gross income of $4,300 or more in 2020.
- That they were not claimed as dependents of another taxpayer.
Tip: Seek professional help from an experienced accountant
The bad part of all this is that the post itself is quite complex, so it will be difficult to fully understand. That is why we recommend that, in case of doubt, you go to a tax specialist.
In addition to helping you prepare your return without errors, a professional accountant will advise you on whether to put these deductions on your tax return. If you have wood for taxes, then you can use software to prepare your taxes.