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:
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.