Medicare / Social Security Tax Calculators, Software, Tools, Guides, 2018 - 2019

TurboTax 2018 - 2019 Medicare Guide

What is Medicare? TurboTax Online Guides Explain

Medicare was put together as the federal health insurance program intended for American citizens who are age 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant, sometimes called ESRD).

There are different parts to Medicare that are designed to help cover specific services: like hospice care, hospital stays, doctors and preventative services, outpatient care, medical supplies and prescription drug coverage.

Medicare Part A and Part C (Medicare Advantage) both qualify as minimum essential coverage (MEC) for the Affordable Care Act (ACA).

TurboTax explains who is covered, and how to enroll.

Tax Forms 1095 A, B, and C, TurboTax 2018 - 2019 Health Insurance Tax Guidance Tips

Form 1095-A is a Health Insurance Marketplace Statement. Never file your taxes until you have an accurate 1095-A. Your 1095-A includes information about Marketplace plans anyone in your household had and it comes from the Marketplace, not the IRS. Keep your 1095-As with your important tax documents. Your 1095-A may be available in your account as early as mid-January, or as late as February 1.

Form 1095-B is a health insurance tax form where you report the type of coverage you have, dependents covered by your insurance policy, and the period of coverage for the prior year. This form is used as verification with your tax return that you and your dependents have at least minimum qualifying health insurance coverage.

Form 1095-C is sent out by large employers who are required to offer health insurance coverage as a provision of the ACA. This applies to employers with 50 or more full-time equivalent employees. Form 1095-C is sent to the IRS and to the employees. It’s provided to all employees who were eligible to enroll in the employer’s plan, regardless of whether the employee actually enrolled in the plan or not.

Does Medicare Count as Minimum Essential Coverage

TurboTax explains that the Affordable Care Act requires taxpayers to have health insurance that provides a certain level of benefits, this is referred to as minimum essential coverage, or MEC.

Medicare benefits come in four "parts":

Part A is hospital insurance. It covers inpatient care in a hospital or skilled nursing facility, as well as hospice care and some in-home care.

Part B is medical insurance. It covers doctor visits, outpatient procedures, medical supplies and preventive care.

Part C is Medicare Advantage. These are health plans offered by private insurance companies that have a contract with Medicare to provide services. When you enroll in a Medicare Advantage plan, the insurer takes care of your Part A and Part B benefits.

Part D is optional prescription drug coverage.

What Is Form 8959: Additional Medicare Tax?

TurboTax explains that starting in 2013 an additional 0.9 percent Medicare tax was charges on certain wages that exceed a threshold. The Additional Medicare Tax is charged separately from, and in addition to, the Medicare taxes you pay on most earnings. Anyone subject to the tax is required to file Form 8959 with their annual income tax filing.

The Self-Employment Tax

If you operate your own business, freelance, or work as an independent contractor, then you are required to pay self-employment tax, which is a tax you never had to pay as an employee. The self-employment tax (officially known as the SECA tax for Self-Employment Contributions Act tax) is the self-employed person's version of the tax paid by employers and employees for Social Security and Medicare, and it's due on your net earnings from self-employment.

Medicare Tax Deduction # 1: Because you pay the self employment tax in addition to regular federal income tax, the IRS provides a fairly generous deductions. These deductions help reduce your federal income tax liability by lowering the amount of income subject to both taxes. You may deduct half of the self employment tax, which includes Medicare tax, before calculating your federal tax liability.

Medicare Tax Deduction # 2: Actual Medicare Payments Are Also Tax Deductible. Self-employed tax payers have one more potential tax deduction from Medicare since they can use paid Medicare premiums to reduce their taxable income for federal income tax purposes.