Medicare premiums are allowed to be deducted from your Itemized Schedule A (Form 1040) federal tax return; this includes medical and dental expenses. However, the IRS has specific criteria that could qualify you or disqualify you from claiming those medical and dental premiums.
The IRS uses an Adjusted Gross Income (AGI) percentage to help determine how much of a person’s Medicare premium, medical, and dental expenses can be deducted. Currently, the AGI is set at 7.5%.
For example, if you made $50,000 last year, the IRS would subtract 7.5% from that $50,000, which would be $3,750. Therefore, if the total of your allowable medical and dental expenses added up to be $5,000, you would be able to deduct a maximum of $1,250. On the other hand, if your medical and dental expenses were less than $1,250, you would not be able to claim any deductions for Medicare, medical, or dental for that year.
What are all the Medical and Dental Expenses that can be deducted?
The IRS defines the medical and dental expenses that can be deducted, but the list is long. These allowable medical and dental expenses generally include:
- cost of treatment
- medical and dental equipment needed
- preventative medical and dental care (routine cleanings)
Some people who need medical and dental treatment may not have a way to get to a clinic or a hospital; these deductions also include transportation to medical and dental care.
The money you had to spend to alter your vehicle for medical purposes or the alterations to your home for medical purposes also count as allowable medical expenses to be deducted from your federal taxes.
Most people receive Medicare Part A premium-free and are not allowed to deduct the premium because they are not paying for that coverage. However, some people must pay a premium for their Medicare Part A coverage. This is because they did not pay at least ten years of Medicare taxes during their working days. The premium paid for their Medicare Part A coverage is considered an allowable medical and dental expense that can be deducted for these individuals.
The premium paid for Medicare Part B and Medicare Part D is also deductible if you have to pay a premium for Medicare Part A.
Medigap supplemental insurance is a deductible medical and dental expense.
Out of pocket money paid for prescription drugs in your Part D coverage are eligible.
Some of the expenses that Medicare does not typically cover, such as the cost associated with contact lenses, eyeglasses, hearing aids, and routine checkups, are tax-deductible.
Some of the premiums associated with long-term care insurance are also deductible.
The following are NOT considered allowable medical and dental expenses:
- Payments for medical and dental treatments paid by an insurance carrier or another source were not you.
- Late fees and other penalties are added to your Part B and Part D coverage premium.
- The money you spent on prescription drugs not purchased in the United States.
- Supplemental vitamins, or nonprescription drugs, which a physician did NOT prescribe, are not deductible as a medical and dental expense.
Whose Medical and Dental Expenses Can I deduct?
You are allowed to include you and your spouse’s medical and dental expenses for tax purposes. This includes Medicare premiums. You can also deduct medical and dental expenses for your spouse during the previous tax year but not anymore. Also, you and your spouse would have had to have been married when the spouse received the medical and dental treatment; or still married at the time you paid for the medical and dental treatment.
And, of course, you can deduct the Medicare premiums and medical and dental expenses for your dependents.
You can also deduct medical and dental expenses, including Medicare premiums, for a relative in your care. This includes a father, mother, grandmother, grandfather, uncle, aunt, brother, half-brother, sister, half-sister, niece, or nephew. Step Brothers and sisters are also considered qualifying relatives, along with stepmothers and stepfathers. In-laws are also included.
Many situations can arise that would cause a person to pay Medicare medical and dental expenses of a person that is now deceased. When this occurs, they can be included in your medical expenses on your federal tax Itemized Schedule A (Form 1040) federal tax. Whether you paid these expenses before or after their death does not matter.