Medicare premiums may help to itemize your taxes

[omni550]

Medicare premiums could be the key to itemizing taxes...includes Part A, Part B, Part C (aka Advantage plans), Part D (Drug plans), as well as the Medicare Supplemental plans (aka Gap plans, such as F, G, N, etc.)

Higher-income folks (those hit with IRMAA) can include the IRMAA surcharges on Parts B and D, too.

https://www.marketwatch.com/story/h...mizing-your-taxes-and-saving-money-2019-01-02

omni

 

[Philliefan33]

Medicare premiums can be deducted, but they are not likely to be “key” to itemizing taxes. The threshold for medical expense deductions is 7,5% of AGI; if you have low income then it is likely that the standard deduction wipes out your taxable income and there is no need to itemize. If you have high income then the 7.5% threshold is well above most Medicare premiums.

With the $10K cap on SALT and the increase in the standard deduction, we did hardly any Schedule A returns last year at our TaxAide site. Those we did had some combination of high medical expenses, a lot of mortgage interest, or very generous charitable donations.

 

[Dash man]

Medicare premiums can be deducted, but they are not likely to be “key” to itemizing taxes. The threshold for medical expense deductions is 7,5% of AGI; if you have low income then it is likely that the standard deduction wipes out your taxable income and there is no need to itemize. If you have high income then the 7.5% threshold is well above most Medicare premiums.

With the $10K cap on SALT and the increase in the standard deduction, we did hardly any Schedule A returns last year at our TaxAide site. Those we did had some combination of high medical expenses, a lot of mortgage interest, or very generous charitable donations.

We’ll get to deduct much of our $22k in health insurance premiums this year, along with other healthcare costs. I haven’t done the calculations to see if it’ll help when we’re on Medicare in 17 months. Our property tax maxes the SALT deduction, and healthcare and charitable donations get us well over the top. When RMDs kick in, it’ll likely go away, unless our charitable donations come straight out of our 401k/tIRA.

 

[Bamaman]

Having 6 surgeries in the last year for my wife may also make us have enough medical expenses to itemize.

 

[Philliefan33]

We’ll get to deduct much of our $22k in health insurance premiums this year, along with other healthcare costs. I haven’t done the calculations to see if it’ll help when we’re on Medicare in 17 months. Our property tax maxes the SALT deduction, and healthcare and charitable donations get us well over the top. When RMDs kick in, it’ll likely go away, unless our charitable donations come straight out of our 401k/tIRA.

Yes, but I haven’t heard of anyone paying $22K in Medicare premiums. The OP stated that Medicare premiums could be key to itemizing; in my experience Medicare premiums alone aren’t enough to trigger a Schedule A.

 

[GenXguy]

I responded to a comment in another thread about this same thing just yesterday.

http://www.early-retirement.org/for...social-security-raise-101731.html#post2356679

I can't imagine this will ever help me or most people on Medicare, because they don't benefit from itemizing vs. the standard deduction.

 

[audreyh1]

It’s that 7.5% of AGI that’s the killer for us subject to IRMAA. Once you subtract that, ain’t much left to deduct, and you still have to exceed the $24.4K standard deduction to see any tax reduction.

Say you are just above the $320K threshold. 7.5% of $320K is $24K. So subtract that from your medical expenses plus insurance premiums.

I figure IRMAA Medicare premiums for $320K threshold plus monthly cheap part D $25 plus say $180 Medigap, for two people comes out to around $17.8Kper year. You’d have to have pretty big medical bills while on Medicare to get above the threshold. And Medicare with Medigap usually limits large out of pocket medical expenses except for perhaps certain drugs and dental bills.

Long term care certainly could do it.

 

[Golden sunsets]

Is the 7.5% permanent. I think I recall that the percentage reverts to 10% starting in 2020.

 

[audreyh1]

That makes it even tougher.

 

[athena53]

Is the 7.5% permanent. I think I recall that the percentage reverts to 10% starting in 2020.

It was supposed to be 10% for 2019 and was changed back to 7.5% again. Who knows for 2020?

In my case I did have $$ to deduct for Medical, between Medicare premiums, new eyeglasses, one semi-expensive prescription, expenses related to a dental implant and- yes- IRMAA surcharges. Remember that not all of us have a $24,000 standard deduction- I'm single so I get half of that and can easily exceed it just with charitable, state and local taxes and a bit of mortgage interest.

 

[nwsteve]

I figure IRMAA Medicare premiums for $320K threshold plus monthly cheap part D $25 plus say $180 Medigap, for two people comes out to around $17.8Kper year. You’d have to have pretty big medical bills while on Medicare to get above the threshold. And Medicare with Medigap usually limits large out of pocket medical expenses except for perhaps certain drugs and dental bills.

Long term care certainly could do it.

Or moving to a Lifecare CCRC. We moved in this year and all our non-refundable entry fee is deductible as well as a percentage of our monthly fee. At our property, 35% is deductible as prepaid long term care premium. Add in our Medicare, Medigap & Plan D, hearing aids, etc, and we easily clear the 7.5% threshold even with our RMDs

 

[wolf]

One tax consideration, often overlooked. Standard deduction for Federal. And itemized for State. Last year, in California. That is what I ended up doing.

Glad I had "tax software", which did the calculations for me. Prepared Fed. Itemized.
Tax software, said, standard deduction way to go.

Transferred Fed tax info, to Calif. tax preparation. Tax software, recommended itemize for Calif. State tax.

 

[GenXguy]

Remember that not all of us have a $24,000 standard deduction- I'm single so I get half of that and can easily exceed it just with charitable, state and local taxes and a bit of mortgage interest.

I'm one of those single people myself, but even while working and in the top 10% of earners for gross income, I still can't benefit from itemizing. And once I retire, my AGI will drop much lower than it is now. So, I can't see how I'll ever be able to deduct Medicare premiums.

 

[athena53]

I'm one of those single people myself, but even while working and in the top 10% of earners for gross income, I still can't benefit from itemizing. And once I retire, my AGI will drop much lower than it is now. So, I can't see how I'll ever be able to deduct Medicare premiums.

My charitable deductions are well over $12,000 so it's easy for me.

 

[RunningBum]

One tax consideration, often overlooked. Standard deduction for Federal. And itemized for State. Last year, in California. That is what I ended up doing.

Glad I had "tax software", which did the calculations for me. Prepared Fed. Itemized.
Tax software, said, standard deduction way to go.

Transferred Fed tax info, to Calif. tax preparation. Tax software, recommended itemize for Calif. State tax.

Neat tip, if your state allows it. Mine doesn't.

https://www.tax.virginia.gov/deductions

If you claimed the standard deduction on your federal income tax return, you must also claim the standard deduction on your Virginia return.
...

If you itemize your deductions on your federal income tax return, you must also itemize them on your Virginia return.

 

[audreyh1]

In my case I did have $$ to deduct for Medical, between Medicare premiums, new eyeglasses, one semi-expensive prescription, expenses related to a dental implant and- yes- IRMAA surcharges. Remember that not all of us have a $24,000 standard deduction- I'm single so I get half of that and can easily exceed it just with charitable, state and local taxes and a bit of mortgage interest.

My example was for what it would take for two people at $320K with IRMAA to cross the 7.5% AGI medical expenses threshold, only the remainder of which could be deducted on schedule A. That part still scales.

 

[Dash man]

It’s 7.5% through 2020.