Saturday, November 27, 2010

Tax question. what exactly is this line asking? Enter the amount of any medical & dental insurance premiums?

Enter the amount of any medical and dental care insurance premiums you paid during 2007? What does it mean by insurance premiums? The question after asks amt of total medical fees so I got confused
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On Schedule A, you can include medical/dental insurance premiums that you paid through work -- the question is, who paid those premiums? And were those payments made with pre-tax dollars? What the IRS says is "Do not include in your medical and dental expenses any insurance premiums paid by an employer-sponsored health insurance plan unless the premiums are included in box 1 of your Form W-2. Also, do not include any other medical and dental expenses paid by the plan unless the amount paid is included in box 1 of your Form W-2." The key point is, they don't want you "double-dipping" -- that is, getting a tax break on your health insurance premium payments at work and also getting another tax break on the same premium payments on your tax form If you already got a tax-break at work, the company would not include the amount in Box 1 of your W-2 and so, you wouldn't be able to include that expense. Did your employer-sponsored health care plan pay your insurance premiums? Or did you pay the premiums and your company simply withheld the premiums from your pay to forward to the insurance company? These types of insurance premiums also include medical premiums withheld from pension income, social security income (for medicare), and health insurance payments written directly to an insurance company (like the other person said). And, here's an example from IRS Publication 17 that describes it far better than I did above. Example: "You are a federal employee participating in the premium conversion plan of the Federal Employee Health Benefits (FEHB) program. Your share of the FEHB premium is paid by making a pre-tax reduction in your salary. Because you are an employee whose insurance premiums are paid with money that is never included in your gross income, you cannot deduct the premiums paid with that money." Hope that helps to clarify.
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