Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Medicare premiums may help to itemize your taxes
Old 01-19-2020, 04:22 PM   #1
Thinks s/he gets paid by the post
 
Join Date: Mar 2004
Posts: 3,022
Medicare premiums may help to itemize your taxes

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/ho...ney-2019-01-02

omni
__________________

omni550 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 01-19-2020, 04:41 PM   #2
Thinks s/he gets paid by the post
Philliefan33's Avatar
 
Join Date: Oct 2014
Posts: 1,149
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.
__________________

Philliefan33 is offline   Reply With Quote
Old 01-19-2020, 06:45 PM   #3
Thinks s/he gets paid by the post
Dash man's Avatar
 
Join Date: Mar 2013
Location: Limerick
Posts: 2,486
Quote:
Originally Posted by Philliefan33 View Post
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.
Dash man is online now   Reply With Quote
Old 01-19-2020, 06:53 PM   #4
Thinks s/he gets paid by the post
 
Join Date: Dec 2014
Location: Huntsville, AL/Helen, GA
Posts: 3,992
Having 6 surgeries in the last year for my wife may also make us have enough medical expenses to itemize.
Bamaman is offline   Reply With Quote
Old 01-19-2020, 07:28 PM   #5
Thinks s/he gets paid by the post
Philliefan33's Avatar
 
Join Date: Oct 2014
Posts: 1,149
Quote:
Originally Posted by Dash man View Post
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.
Philliefan33 is offline   Reply With Quote
Old 01-19-2020, 07:33 PM   #6
Recycles dryer sheets
 
Join Date: May 2019
Posts: 280
I responded to a comment in another thread about this same thing just yesterday.

http://www.early-retirement.org/foru...ml#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.
GenXguy is offline   Reply With Quote
Old 01-19-2020, 07:41 PM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 23,982
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.
__________________
Retired since summer 1999.
audreyh1 is online now   Reply With Quote
Old 01-20-2020, 05:04 AM   #8
Thinks s/he gets paid by the post
Golden sunsets's Avatar
 
Join Date: Jun 2013
Posts: 1,513
Is the 7.5% permanent. I think I recall that the percentage reverts to 10% starting in 2020.
__________________
"Luck favors the prepared mind"
Pasteur
Golden sunsets is offline   Reply With Quote
Old 01-20-2020, 05:37 AM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 23,982
That makes it even tougher.
__________________
Retired since summer 1999.
audreyh1 is online now   Reply With Quote
Old 01-20-2020, 06:40 AM   #10
Thinks s/he gets paid by the post
 
Join Date: May 2014
Posts: 4,417
Quote:
Originally Posted by Golden sunsets View Post
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.
athena53 is online now   Reply With Quote
Old 01-20-2020, 11:29 AM   #11
Thinks s/he gets paid by the post
 
Join Date: Jun 2004
Location: W Wash
Posts: 1,313
Quote:
Originally Posted by audreyh1 View Post
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
nwsteve is offline   Reply With Quote
Old 01-20-2020, 11:49 AM   #12
Full time employment: Posting here.
 
Join Date: Dec 2006
Posts: 647
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.
wolf is offline   Reply With Quote
Old 01-20-2020, 04:52 PM   #13
Recycles dryer sheets
 
Join Date: May 2019
Posts: 280
Quote:
Originally Posted by athena53 View Post
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.
GenXguy is offline   Reply With Quote
Old 01-20-2020, 06:21 PM   #14
Thinks s/he gets paid by the post
 
Join Date: May 2014
Posts: 4,417
Quote:
Originally Posted by GenXguy View Post
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.
athena53 is online now   Reply With Quote
Old 01-20-2020, 06:43 PM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
RunningBum's Avatar
 
Join Date: Jun 2007
Posts: 9,115
Quote:
Originally Posted by wolf View Post
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

Quote:
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.
RunningBum is offline   Reply With Quote
Old 01-20-2020, 10:27 PM   #16
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 23,982
Quote:
Originally Posted by athena53 View Post
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.
__________________
Retired since summer 1999.
audreyh1 is online now   Reply With Quote
Old 01-21-2020, 04:11 PM   #17
Thinks s/he gets paid by the post
Dash man's Avatar
 
Join Date: Mar 2013
Location: Limerick
Posts: 2,486
It’s 7.5% through 2020.
__________________

Dash man is online now   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Medicare Advantage premiums palomalou Health and Early Retirement 3 05-25-2011 01:00 PM
Medicare Premiums and Co-Insurance Rates for 2010 haha Health and Early Retirement 7 10-21-2009 04:04 PM
Taxes, Taxes. Taxes mickeyd FIRE and Money 1 02-09-2008 01:18 PM
Medicare Part B premiums to be income adjusted Elderdude Life after FIRE 20 09-14-2006 05:03 PM
Scott Burns: Medicare premiums rise faster than Social Security COLA Nords FIRE and Money 1 06-07-2006 05:44 PM

» Quick Links

 
All times are GMT -6. The time now is 08:27 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2020, vBulletin Solutions, Inc.
×