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Part B, Medicare and Taxes

February 19, 2011 06:59PM
I don't know if it is a new rule or whether I just never spotted the info, but for those paying Part B of Medicare, that expense can be deducted as a business expense to your self-employment (i.e. mystery shopping business). I haven't explored it as I am not quite there yet, but I suspect it is deductible against net profits of your business just as currently I deduct my health insurance against those net profits. I would assume the deductibility is whether the Part B is automatically taken out of your SS check or is paid separately.
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More About Mystery Shopping Taxes
April 13, 2011 06:53PM
Ah, Flash, I think that it cannopt be taken directly off the Schedule C, but must go through the "health insurance for self-employed" loop, just as if you were buying insurance on the open market. Add it to the premiums that you pay personally for Medigap and Part D (drugs), and plug that sum into the SE health insurance box on the 1040, add water, carrots, and onions, and follow the directions to get soup, I think.

BTW, I do not think it makes any difference how you pay the basic Medicare premium; if you have it deducted it's just as if an employer deducted your share of your health insurance costs. BUT, I would check.

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April 13, 2011 07:15PM
Perhaps I stated it wrong. If my insurance costs me $1000 per year (ha ha, a joke but for purpose of example only) and my Schedule C net profit is $1500 my entire insurance cost is deductible based on the business so my business is taxed on $500 profit. If my insurance costs me $1000 and my Schedule C net profit is $700, then $700 is deducted against the business and the other $300 goes to my Itemized Deductions. Luckily TurboTax asks the questions and does the calculations for me and puts everything in its proper place. But agreed that there is not a specific Schedule C line to slap in the full $1000 for a deduction from the initial net profit calculation.
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