Medical Care Insurance Deduction May be Claimed on Schedules H and H-EZ

If you are preparing a 2007 homestead credit claim for a person who is not required to file a Wisconsin income tax return, you may still claim the medical care insurance deduction to reduce his or her household income. The deduction may be claimed on line 8b of Schedule H (line 5b of Schedule H-EZ), up to the amount of taxable income reported on lines 8a and 8b of Schedule H (lines 5a and 5b of Schedule H-EZ).

Example 1: Claimant A received $400 of taxable interest and $10,000 of gross social security benefits in 2007. Medicare Part B premiums of $1,122 were deducted from the social security benefits received.

The $400 of taxable interest would be reported on line 8a of Schedule H (line 5a of Schedule H-EZ). $375 (33.4% of the $1,122 in Medicare Part B premiums paid) would be reported on line 8b of Schedule H (line 5b of Schedule H-EZ) as a negative number and designated as a medical care insurance deduction. The $10,000 of gross social security benefits would be reported on line 9b of Schedule H (line 6b of Schedule H-EZ).

Example 2: Same facts as in Example 1, except that the taxable interest Claimant A received in 2007 was $200 instead of $400.

The $200 of taxable interest would be reported on line 8a of Schedule H (line 5a of Schedule H-EZ). $200 would be reported on line 8b of Schedule H (line 5b of Schedule H-EZ) as a negative number and designated as a medical care insurance deduction (the deduction is limited to the $200 of taxable income reported). The $10,000 of gross social security benefits would be reported on line 9b of Schedule H (line 6b of Schedule H-EZ).

Example 3: Same facts as in Example 1, except that in addition to the $400 of taxable interest and $10,000 of gross social security benefits, Claimant A also received a taxable pension distribution of $1,000 in 2007.

The $400 of taxable interest would be reported on line 8a of Schedule H (line 5a of Schedule H-EZ). $625 (the $1,000 taxable pension distribution less a $375 medical care insurance deduction) would be reported on line 8b of Schedule H (line 5b of Schedule H-EZ). A schedule showing how the $625 was computed should be included with Schedule H or H-EZ. The $10,000 of gross social security benefits would be reported on line 9b of Schedule H (line 6b of Schedule H-EZ).

Last updated February 5, 2008