Missouri Health Insurance Deduction

January 21, 2011 by Jan Roberg
Filed under: Missouri Tax Tips, Uncategorized 
Missouri Health Insurance Deduction

Cartoon by Bob Conroy, copyright 2009

When you live in a state that has an income tax, like Missouri, you need to be aware of the state’s little deductions that aren’t automatically on your federal tax return.  One of these is the Health Insurance deduction.

It’s very difficult to claim any medical deductions on your federal income tax return because you have to meet the requirement that your medical expenses exceed 7.5% of your adjusted gross income.  In Missouri, you don’t have that.  If your health insurance isn’t already exempt from taxes, you can claim your health insurance as a deduction on your Missouri State income tax return.

You’ll find the deduction on line 11 of the Missouri schedule A.  For most people, its just a straight, direct entry on the form.  If you happen to have been able to claim your health insurance on your federal schedule A, or had medicare payments withheld from your Social Security, there’s a worksheet to determine just how much of a deduction you’ll get to claim on your Missouri return.  (For some people, your computer software will automatically calculate the amount of medicare insurance you can deduct, but you need to watch out if you’re adding additional insurance payments that you don’t delete the medicare payments.)

The health insurance deduction is especially valuable to senior citizens who may qualify for the Missouri Property Tax Credit.  It not only reduces their taxable Missouri income, but by reducing the income, it can increase the amount of property tax credit they receive.  Many seniors who qualify for the property tax credit don’t have any Missouri taxable income so the preparers don’t bother to look for deductions and that’s a mistake.

If you’d like to take a look at the worksheet for the qualified health insurance deduction, click on this link:

http://dor.mo.gov/forms/MO-1040_2009.pdf

You’ll have to go to page 16 of the directions to find it.

Also, if you happen to be self employed, be sure to check my post about the Missouri Self-Employed Health Insurance Tax Credit.  If you qualify for that, it’s even better for your taxes than the deduction.

Comments

28 Comments on Missouri Health Insurance Deduction

  1. Joe Roberts on Mon, 27th Feb 2012 9:47 pm
  2. My 91 year old mother is a Missouri resident and she has filed Missouri income tax returns for the last few years using the short form and not claiming the qualified health insurance deduction. Can she file a Missouri amended return for the past couple of years and if so what is required. Thanks Joe Roberts

  3. Admin Roberg on Tue, 28th Feb 2012 3:39 am
  4. Hi Joe,
    Yes she can. I did this for someone last year and went back for three years. Basically, you just need some documentation, but you don’t mail it with the return–you just need it as back up in case you’re asked for it.
    Remember that the Medicare part B withholding from Social Security counts has a paid health insurance premium too. If your Mom qualifies for a Property Tax Credit, this could increase her PTC as well.
    To file a Missouri Amended return–basically, you’re recreating the original return and checking the “amended return” box. You’ll fill in the “amended return information” section that goes on page 2–showing the date of the amendment, and how much was paid or refunded on the original return.
    The only thing you’re changing is the health insurance deduction line. (I’m assuming your using compuer software and everything else will automatically flow through.) If you’re doing it by hand, of course you’ll have to redo the math.

  5. Joe Roberts on Tue, 28th Feb 2012 4:40 pm
  6. Thanks for the information! I assume I’ll need to fill out the MO1040 long forms and attach all the same attachments including paid property tax receipts, pension 1099 etc that she attached to the old returns and the same Fed tax return which hasn’t changed since she didn’t itemize. Is that right? Also am I right that even if she didn’t itemize on the federal return she can still claim the health insurance premiums on the Mo returns. Joe Roberts

  7. Jan Roberg on Tue, 28th Feb 2012 4:46 pm
  8. Hi Joe–
    You’re right–you don’t need to change the federal. And, you don’t need to itemize on the federal to claim the health insurance on Missouri (I think that’s why so many people miss it.)
    Plus–you don’t need to attach the stuff to the Missouri return because they already have that from before. Really you’re only changing the health insurance line. They may come back and ask you for documentation–but you don’t send it with the return.

  9. Joe Roberts on Thu, 1st Mar 2012 2:03 pm
  10. Thanks again – Joe Roberts

  11. Preparing for Tax Day | Foundation Care Blog on Mon, 9th Apr 2012 10:14 pm
  12. Gary T on Wed, 18th Apr 2012 3:23 pm
  13. In calculating this deduction, I don’t understand the deduction when Medicare premiums are deducted from benefit payments.
    If you follow the MO worksheet, you can only deduct the applicable percentage of the SSA benefits that are taxable on a Federal basis. Since the insurance premiums withheld have nothing to do with what benefits are taxable, why would you have to reduce the premiums?

  14. Admin Roberg on Wed, 18th Apr 2012 5:01 pm
  15. Hi Gary,
    Good question. I’ll try to explain, but it’s going to sound lame even if I say it right. Missouri taxes you on your federally taxable income. Missouri has it’s own deductions and stuff that they add and subtract–but they start with your federal adjusted gross income.

    The healthcare deduction for your medicare premiums is a deduction against your taxable income. If you didn’t pay any tax on your social security then you won’t get a deduction for your medicare payments. It’s kind of like when you have health care benefits taken out of your paycheck. You don’t pay tax on that money–so you can’t take a tax deduction for it.

    So–when you don’t pay tax on your social security–then you can’t get a tax deduction for your medicare premium payment either.

    I hope that makes sense–I know it’s funky, but that’s where it’s coming form.

  16. Gary T on Wed, 18th Apr 2012 6:54 pm
  17. Thanks for the response. I guess I could understand the “logic”, IF, the Medicare premiums affected the taxability of the SSA benefits. But, that is not the case.
    You gave the scenario when you have insurance benefits withheld from your paycheck. You don’t pay tax on the money only if the health insurance premiums are taken out of your paycheck “pre-tax”. The Medicare premiums are the equivalent of an “after-tax” treatment of premiums. Maybe I need to review the actual MO statute for this deduction. I just don’t see the correlation with having my SSA benefits included in income before I can deduct the Medicare premiums. Because, whether I have to pay tax on my social security benefits so not prevent me from using the Medicare premiums I have paid.
    Once again, thanks for response.

  18. Connie on Mon, 11th Feb 2013 8:21 am
  19. Would like to know if I can claim copays, prescriptions on my Missouri tax form

  20. Connie on Mon, 11th Feb 2013 8:23 am
  21. Will you send me an email verifying the information that you are sending?

  22. Elisha on Mon, 11th Feb 2013 9:07 pm
  23. I’m trying to figure out if I can claim a deduction for my health insurance premiums. I don’t get SSI but do pay health insurance premiums through work. It doesn’t seem easy to tell though if I’m paying those with after tax income or not by looking at my W2. Any tips? My W2 does use code DD to break out my Employer Sponsored Health Coverage.

  24. Jan Roberg on Thu, 14th Feb 2013 7:24 pm
  25. Connie, no, you cannot claim your copays and prescriptions. Just your health insurance.
    Sorry, I can’t send you a separate email. It’s tax season and I’m kind of busy.

  26. Jan Roberg on Thu, 14th Feb 2013 9:03 pm
  27. Hi Elisha,
    When you pay for your health insurance through your employer, those funds are already exempted from your taxable income so they would not be included in the Missouri Health Insurance deduction.

  28. Sudhir Adhikari on Wed, 27th Feb 2013 4:08 pm
  29. Hi,
    My employer is paying me stipend. 50,000 approximately. And 15000 approximately for health care insurance benefits for me and family(paid directly to the companies). Total, stipend is 65000. I’m paying tax on the basis of total income of 65000. It’s clear to me the insurance premium( post tax) doesn’t qualify for deduction from federal taxes. However, for Missouri is it considered as qualified health insurance premium?

  30. Jan Roberg on Sat, 9th Mar 2013 10:20 pm
  31. Hi Sudhir,
    You ask a very good question. Now it seems to me that since you are being taxed on the $65,000 instead of $50,000 — then that would mean that your health insurance does qualify for the Missouri Health Insurance deduction.

    Now, I realize that you didn’t ask–but I’m going to ramble on a bit anyway. You say that you’re on a stipend–to me that usually that means graduate school research or teaching kind of work. You don’t receive a W2, but a letter from the school. I mention this because you may have some othe deductions there.

    Stipends are usually listed on line 7 of your tax return, just like wages. But did you know that you may deduct your expenses from the stipend to reduce your taxable income? For example–let’s say you’re a researcher in a lab. You needed to attend a conference in Chicago about your research. The conference cost you $200, the hotel was, $300, the airfare another $125, etc. You would deduct all of these expenses (unless they were reimbursed by the school) from your stipend.

    I just thought I’d mention that in case that was your situation. Many people don’t know about the ability to deduct your expenses in that situation. Also, your stipend isn’t taxable if it is used to pay your qualified tuition expenses.

  32. Gary T, CPA on Sun, 31st Mar 2013 10:23 pm
  33. RE your reply to Elisha on 2/14/2013:

    Even though you may be paying your health insurance premiums through your employer, they may not be excluded from your taxable income. They are only excluded if you particapte in a Sec. 529 plan. Not all employers offer this type of plan and many employees pay their share of health insurance premiums on an “after-tax” basis and do not receive any reduction in taxable income.

  34. Amy on Tue, 2nd Apr 2013 5:31 pm
  35. I’m working on my mom’s taxes and have a question regarding what can be included as a qualified health insurance premium. First, I see that she has Medicare taken out of her Social Security, so I know that qualifies. Second, she has health insurance premiums taken out of her pension. It looks like these premiums are taken out after taxes, so I am figuring that these premiums qualify as well. Correct?

    Thanks for your help.

  36. Charlotte on Mon, 8th Apr 2013 10:11 pm
  37. If I paid out-of-pocket for health insurance but didn’t itemize deductions on my federal return, can I deduct “qualified medical expenses” on my Missouri form?

  38. Gary T on Tue, 18th Jun 2013 8:50 am
  39. In ref to your reply to Sudhir, are you saying you can deduct expenses even if the income is not reported on Sch C? And, if it is reported on Sch C, wouldn’t it be liable for SE tax ?

  40. Jan Roberg on Sun, 14th Jul 2013 4:52 pm
  41. @Gary T,
    Sorry, I didn’t see this one before. Stipends are different from Schedule C income. You don’t deduct the expenses of a stipend on the Schedule C, you make up a worksheet to go along with the line 7 reporting of the stipend income. (I’m being geeky to you because you’re a CPA so you know what I’m talking about.)
    There’s no SE tax on the stipend.

  42. Jan Roberg on Sun, 14th Jul 2013 7:02 pm
  43. Also at Gary T,
    You’re absolutely right, there are times when what you pay for health insurance is taxable. You do have to be on the look out for that. Thanks for pointing that out.

  44. Jan Roberg on Sun, 14th Jul 2013 7:03 pm
  45. Hi Amy,
    So on your Mom’s pension, they take her health insurance out after she’s paid tax on the income? Then you could include that towards the Missouri credit.

  46. Jan Roberg on Sun, 14th Jul 2013 7:05 pm
  47. Hi Charlotte,
    Yes, you can still deduct your health insurance premiums on your Missouri tax return even though you didn’t itemize your deductions on your federal return. I think that’s the best part of this deduction!

  48. M. Sadler on Wed, 22nd Jan 2014 3:00 pm
  49. Is the deduction for medical premiums available to NON-residents with Missouri income or only to Missouri residents?

  50. Jan Roberg on Wed, 22nd Jan 2014 9:20 pm
  51. Hi M. Sadler,
    Wow, I really had to think about that one! But the deduction is off of your “federal” income, so it’s still allowable to non-residents. Good question! Thanks.

  52. B. Longs on Mon, 27th Jan 2014 1:16 am
  53. Are COBRA premiums considered a Missouri Qualified Health Insurance Premium? I paid over $5100 for COBRA for 3 months! Thanks!

  54. Jan Roberg on Mon, 27th Jan 2014 2:19 pm
  55. Hey B Longs,
    Yes, you can count your COBRA premiums.

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