SELF-EMPLOYED CAN DEDUCT MEDICARE PREMIUMS, IRS CHIEF COUNSEL ADVISES

Headnote

DEDUCTIONS AND CREDITS

Explaining a recent reversal of a long-held IRS stance, the Office of Chief Counsel advised IRS attorneys that self-employed individuals may deduct Medicare premiums from their self-employment income. Chief Counsel Advice (CCA) 201228037 clarifies an IRS position that previously has appeared only in instructions to Form 1040, U.S. Individual income Tax Return, and IRS publications for tax years 2010 and forward allowing the deduction.

Taxpayers who failed to deduct Medicare premiums for prior tax years within the statute of limitation period may file amended returns to claim the deduction.

Before tax year 2010, Form 1040 instructions for line 29 stated, "Medicare premiums cannot be used to figure...