[MaxGhenis]

Exclude medical premiums a dependent deducts through self-employed health insurance from the claiming filers' Schedule A medical expenses.

Parents may count only the medical expenses they paid under 26 U.S.C. 213(a) and 26 CFR 1.213-1(a)(1). A dependent who deducts their own premiums paid them, so those premiums leave the parents' Schedule A. Taxpayers also exclude their own deducted premiums from Schedule A under section 162(l)(3).

For example, a dependent deducts $3,000 medical premiums and $480 eligible long-term care premiums against $10,000 of Schedule C or partnership earnings. With $50,000 of other medical expenses, the parents' medical subtotal falls from $53,000 to $50,000. The dependent's $3,480 deduction stays unchanged. The IRS sets the 2025 long-term care limit in Rev. Proc. 2024-40, section 2.28.

Invariants and validation

For computed subtotals with derived exclusion helpers and deductions within their corresponding paid premium pools:

• Schedule A premium use plus the filers' deduction and every dependent's deduction equals medical premiums plus eligible long-term care premiums within $0.01, and never exceeds premiums paid within that tolerance.
• Each dependent's exclusion consumes only their own premiums. Non-premium expenses remain intact, and filers' premiums leave the subtotal once.
• Filers without a dependent medical exclusion retain the existing computed subtotal. Supplied deductions and subtotals retain their existing precedence.

The conservation identity retains the existing inclusion of undeducted dependent-paid premiums; it does not establish their deductibility on the parents' return. #10270 addresses the broader payer-attribution correction.

Hypothesis checks cover conservation, earnings caps, premium splits, separate tax units, and state paid-cost bases. YAML cases cover zero and premium-pool boundaries, excess supplied deductions, sibling isolation, a self-employed filer alongside a dependent, and supplied-exclusion overrides.

Validation: 21 dependent-premium YAML cases, 17 New Jersey YAML cases, five conservation tests, ten long-term care tests, and 103 source-conflict guard tests. Ruff format, Ruff lint, and whitespace checks pass.

State effects

New Jersey removes dependent premiums once and preserves its supplied-subtotal path. Montana's 2021–2023 calculation retains other medical expenses and supplied exclusions. North Dakota and New Mexico retain their paid-cost bases for computed subtotals with derived exclusion helpers.

With a computed subtotal, a supplied applied exclusion omits dependents' medical premiums. Montana restores that dependent amount separately. North Dakota and New Mexico use the override unchanged, so supplying it can change their paid-cost bases.

Affected filers may deduct less for medical expenses in states that use the federal subtotal or deduction. When calculating Missouri's subtraction, we use the corrected subtotal in Form 5695, lines 10–12, so affected families' premium subtraction can shift.

Methodology choices

• Remove only premiums the dependent deducts. Preserve the existing inclusion of undeducted dependent-paid premiums pending Count only filer-paid premiums in Schedule A medical expenses #10270.
• Reuse the existing person deductions and medical/long-term care split. Bound each dependent's medical exclusion to their own paid premiums and deduction after its long-term care part.
• Preserve the existing supplied-input convention. With a computed subtotal, a supplied exclusion covers filers only. North Dakota and New Mexico restore the complete supplied exclusion with a supplied subtotal; Montana caps its medical portion at the filers' premiums.
• Preserve the head/spouse pooled medical-first allocation. State paid-cost addbacks restore the newly removed dependent medical premiums when the exclusion helper derives from components; they retain the existing dependent long-term care treatment.
• Attribute premiums to the person who paid them, including family coverage paid by a filer. Supplied deductions above the corresponding paid premium pools fall outside the conservation invariant.

Sources

The statutory captures match the official govinfo text. Their SHA-256 hashes are:

• usc-26-162-2024-coordination.txt: 8ff4fd400b26babeb4787ef447026de3ba65911fd1e79638b9f9136ad49cc90f
• usc-26-213-2024-coordination.txt: ceaa2a1275ba00657577a497c33fa7e35bd96c9d949e89836fc171ff65d59475

Overlap

#10270 changes the federal subtotal and overlapping state consumers. Coordinate the landing order and incorporate the earlier change before merging the second PR, so dependent premiums leave the subtotal once. Rerun both PRs' attribution and conservation cases together.

impact: Affected claiming filers who itemize may owe more federal income tax.
axiom: TheAxiomFoundation/rulespec-us#1654 queued

Microsimulation impact

To be measured before merge.

🤖 Generated with Claude Code