If you're like a lot people in the "Boomers and Beyond" cohort, you've become an entrepreneur after retiring or getting laid off from your job. Here's good news from none other than the Chief Counsel of the Internal Revenue Service: Not only can you deduct your Medicare premiums, but you can also do so retroactively. In a memorandum with the subject line "Deductibility of Medicare Premiums Under Code Section 162(l)," the Chief reversed an earlier decision on this issue.
Here's the actual text of his conclusions:
1. All Medicare Parts are insurance that constitutes medical care under section 162(l).
2. A partner in a partnership may pay the premiums directly and be reimbursed by the partnership, or the premiums may be paid by the partnership . . . A sole proprietor must pay the Medicare premiums directly.
3. If all the requirements of section 162(l) are satisfied, Medicare premiums may be deducted under section 162(l) for coverage of the self-employed individual’s spouse, dependent or a child (as defined in section 152(f)(1) who as of the end of the taxable year has not attained age 27).
4. Self-employed individuals who failed to deduct Medicare premiums for prior years may file an amended return to claim the deduction.
You and your accountant can download the entire memorandum as a PDF here: 201228037
