All this week I've been answering last-minute tax questions as part of Marketplace Money's special report on tax season, and here's the latest. Jacqueline writes from Lake Havasu, Arizona:
I dropped my individual health insurance last year and added myself as a domestic partner to my fiancÃ©s plan. This saves us about $100 a month.
Is the after tax deduction on his paycheck for my insurance deductible for either one of us?
ANSWER - The Internal Revenue Code provides that premiums for health insurance are excludable from gross income provided the coverage is for the employee, the employee's spouse or dependents.
The IRS has a great publication that has a lot of detailed information on medical expenses.
But for you, I'll assume you are not a dependent of your fiancÃ© . Employers may provide coverage for domestic partners (opposite-sex or same-sex) but the value of this coverage must be included in the employee's gross income and is subject to withholding and FICA taxes.
In my opinion, you or your fiance can't take a medical deduction because the cost is not for him, his spouse or a dependent. You didn't pay it so you are not eligible to take a deduction either.
However, you may not be losing much, because these kinds of expenses are only deductible if you itemize your taxes. Also the expenses have to exceed 7.5% of your adjusted gross income.
Frank Degen, EA is a self employed practitioner in Setauket (Long Island), New York. He has a Bachelors degree in mathematics from Iona College and a Masters degree from Johns Hopkins University. He became an Enrolled Agent in 1984. Degen, served a three-year term on the Internal Revenue Service Advisory Council (IRSAC) and was Chair in 2009.