Medicare Premiums for Self-Employeds

If you are self-employed, or a more-than-2% S corporation shareholder, and obtain your health insurance through Medicare, you can treat your monthly premiums as a deduction from gross income. You don’t have to itemize to deduct these premium costs. A couple of years ago, the IRS had indicated this result but did not provide any guidance; now it has done so.

The above-the-line deduction includes coverage for the self-employed individual or S shareholder for Medicare Parts B, C, and D. If the business owner’s spouse also has Medicare, his or her premiums can be included in the above-the-line deduction. Technically, Medicare premiums for a child under age 27 can also be included but such coverage is extremely rare.

Those who failed to deduct Medicare premiums from gross income on prior returns should consider filing amended returns for open tax years (those that are not yet closed by the statute of limitations).