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itemizing medical costs

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Level 1

Are medical insurance cost taken out directly from a Non-Taxable pension income allowed as medical cost on Itemization Schedule A ?

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Level 11

Isn't that what Medicare is, for a lot of Social Security recipients?

More facts might be helpful, but I'm thinking of a retired firefighter whose pension, although from the state public safety fund, qualifies as workers compensation.  If he and his wife have enough income from other sources to file a return and itemize, the source of the payment is irrelevant.  

It's like my 80-year-old client who inherited $200K and tithed $20K to her church.  Didn't matter that the inheritance was nontaxable.  Although first, we had to convince the new IRS office auditor that the Catholics are tax-exempt, even if they're difficult to find in that big book of nonprofits.  

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Level 15

I think I had that auditor once. Took a while to convince him that Christmas was not a "business day".


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Level 12

You stated this: "You can't take a deduction for health insurance you paid for with pre-tax money"

But that's not where you seem to be stuck. Your Title is for Medical Costs, not Insurance, and as Medical Deduction. Pay attention to those details. You need to avoid Double Dipping = getting two benefits on the same funds.

"My client medical insurance cost is taken out of his totally non-taxable pension."

That is not unusual for a traditional retirement where the retiree is covered by the ex-employer corporation's insurance as a retiree.

"Medical Insurance cost simply reduces the amount of pension he receives, so can I use those medical insurance cost when itemizing?"

No. He already got the benefit of Not reporting it. As a long-time-gone member of this community once stated: You cannot write off what you never wrote on.

And it depends on the coverage and the taxpayer's circumstances.

Here's a different example: You can pay your Medicare Premium (not supplemental insurance, though) with HSA funds, and if you are a Sched C filer, that counts as a business expense deduction.

So, it seems you already found your answer.

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Level 12

Separate your two different events.

Pension is a Source of funding; it has its own rules.

Medical Costs are a type of Spending. It has its own rules.

They don't Connect the way you stated it.

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Level 1

My problem is, IRS rule states 'You can't take a deduction for health insurance you paid for with pre-tax money"  My client medical insurance cost is taken out of his totally non-taxable pension. Medical Insurance cost simply reduces the amount of pension he receives, so can I use those medical insurance cost when itemizing?

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Level 11

@gaetano123  Yes, because the pension is not pre-tax, it's non-tax.  

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Level 12

It seems @BobKamman Figured out the missing detail. Thanks.

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