Rev. Rul. 66-216

Effective for taxable years beginning after December 31, 1965, section 1401(b) of the Internal Revenue Code of 1954 imposes a tax for hospital insurance on the `self-employment income' of every individual, and section 3101(b) of the Code imposes a tax for hospital insurance on wages received by an `employee' with respect to `employment,' as those terms are defined in the Code. The maximum amount of self-employment income or wages which is now subject to these taxes is $6,600 for any taxable year. The taxes are imposed at rates ranging from 0.35 percent for 1966 to 0.80 percent for 1987.

In connection with the legislation which was enacted as the Social Security Amendments of 1965, the committee reports (H. Rep. No. 213, 89th Cong., 1st sess., C.B. 1965-2, 733, at 745, and S. Rep. No. 404, p. 1, 89th Cong., 1st sess., C.B. 1965-2, 758, at 764) contain the following language with reference to section 213(e) of the Code, as amended:

Taxes paid under section 1401 (relating to tax on self-employment income) or under section 3101 (relating to tax on income of employees) of the Internal Revenue Code do not constitute amounts paid for insurance.

Held , amounts paid as self-employment tax under section 1401(b) of the Code and as employee tax under section 3101(b) of the Code do not qualify as amounts paid for insurance for the purpose of the medical expense deduction provided by section 213 of the Code and may not be taken as a medical expense deduction on returns filed by individuals for any taxable year.

However, as distinguished from the taxes for hospital insurance cited above, amounts paid as premiums under part B of title XVIII of the Social Security Act, Public Law 89-97, 42 U.S.C. 1395j-1395w, relating to supplementary medical insurance for the aged, qualify as amounts paid for insurance covering medical care and are deductible as medical expenses to the extent provided by section 213(a) of the Code.