Question

Self-Employed Health Insurance Deduction Worksheet - 2020

Forum|Forum|5 years ago
February 21, 2021
5 replies
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At the bottom of the Self-Employed Health Insurance Deduction Worksheet there is a comment

"A self-employed health insurance adjustment of $XXXX.XX from premiums paid through an
exchange is included as an adjustment to income but does not appear on these worksheets".

The $XXXX.XX is added to the amount on line 10 of the worksheet and transferred to Form 1040 Schedule 1 line 16. Whats going on here with the "adjustment". Is this correct?

DaveF1006

A self-employed health insurance adjustment is listed in Line 16 of Schedule 1. What is meant by an adjustment is that this will reduce taxable income in your return so that you will have less tax liability. This is normal as this how your self-employed premium is handled on a federal tax return.

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A

arewedoneyet

I'm seeing the same situation, and I'm concerned there is a problem. I understand that I'm entitled to the self-employed health insurance deduction. The problem is that TurboTax is making an "adjustment" over and above the amount the premium amount that I paid, and TurboTax doesn't explain how it arrived at the new number.

As with the person who started this thread, TurboTax generated a "Self-Employed Health and Long-term Care Insurance Deduction Worksheet" for me. Line 5 of the worksheet shows $500 (to use a round number) for the deduction, saying I should enter $500 for the self-employed heath insurance deduction on Form 1040 or Schedule 1. Great! I agree! That is the amount I paid for the premium and is the amount I can enter on schedule 1.

BUT the bottom of the worksheet says: "A self-employed health insurance adjustment of $<number> from premiums paid through an exchange is included as an adjustment to income but does not appear on these worksheets."

In other words, the ACTUAL number TurboTax places on Schedule 1 and line 10a of the 1040 is $900 (the sum of $500 plus the $400 amount listed at the bottom of the worksheet). I determined after a lot of sleuthing that the number at the bottom of the worksheet (say, $400) is from column A of Form 1095A. I don't see any justification for this extra adjustment to income. I don't qualify for the premium tax credit or related credits.

I have spent hours on the phone with TurboTax support, have spoken with my accountant, and have read numerous IRS publications. No one can explain what TurboTax is doing. It seems that Turbox tax is incorrectly calculating the amount of the self-employed health insurance deduction it puts on line 22 of Schedule 1 and on line 10a (adjustments to income) of form 1040.

In my particular situation, I'm the single employee of an LLC that is taxed as an S-Corp. I'm entitled to claim the self-employed health insurance deduction although I'm not a schedule C filer. I believe TurboxTax should be ignoring the information in Form 1095A and should only pay attention to the health insurance premium amount included in box 1 of the employee's W2.

S

sailor4

Arewedoneyet,

I think TT is trying to do an iterative calculation to deal with the recursive issue resulting from interplay between premium tax credit (even if that is zero) and self-employed health insurance deduction and AGI.

1. In the memo at the bottom of "Self-Employed Health and Long-term Care Insurance Deduction Worksheet" they are showing the result of their (incorrect in my case) iterative solution PLUS the sum in column A of Form 1095.

2. AND... Their iterative calculation is incorrect in fringe cases. See here: When TurboTax and H&R Block Give Self-Employed Wrong ACA Subsidy (thefinancebuff.com) and here: Self-Employed ACA Subsidy Calculator - The Finance Buff.

Your solution ("I believe TurboxTax should be ignoring the information in Form 1095A and should only pay attention to the health insurance premium amount included in box 1 of the employee's W2.") will not solve the problem for my case, but an ability to override line 16 with the result derived from Financial Buff calculator WILL. Unfortunately, I can't do that.

Hope my use case might help you, or someone else.

B

BillM223

@rebsrogers

Until you have done the worksheet that I described above, I cannot be sure that your situation is due to the iterative situation as described in the links or due to your self-employed health insurance deduction being reduced by the SE tax deduction and the SIMPLE/SEP/qualified plan deduction. Most taxpayers are unaware of this limitation so I have to point it out.

Having said that, you indicated the desire to "edit the form".

In TurboTax Home & Business (the CD/download version), the self-employed health insurance deduction appears on line 16 of Schedule 1 (1040).

As you note, you cannot override it there. But in practice, if you follow a number to its origin, you should be able to modify the number there.

In this case, however, because of that line quoted above - "A self-employed health insurance adjustment of $XXXX.XX from premiums paid through an exchange is included as an adjustment to income but does not appear on these worksheets", we see that there is no worksheet showing the actual calculation (where we would normally do the override). The "$XXXX.XX" is $5,169 in my test

However, there may be a way to modify the line 16 entry, if you want to make it larger (it doesn't work to make it smaller).

Write down the line 16 amount. Then go into step-by-step mode and go back to expenses for the Business. Where it asks for health insurance expenses, go into that section. Yes, do this even though the numbers are actually coming from the 1095-A calculation.

When I entered $2,000 on my test for the Health Insurance Premiums in the Business interview, it increased my $5,169 line 16 amount to $6,991.

This new number is the result of the hidden calculation being reduced from $5,169 to $4,991 and then having the $2,000 added to it. This does not affect the net income on Schedule C.

Thus, if you know the number you want, and the number you want on line 16 is larger than what is there now, you can increase the line 16 amount in a somewhat unpredictable way by adding health insurance premiums in the regular Business interview. A little iteration and you should have something close to what you want.

Now I have to create a test case showing that the initial calculation is wrong (which may not be the case)...unless you have a case that fails that you would like to share.

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W

wallgeneralemail

I ran into a similar problem and to fix it, I opened the form 1095-A in "forms" and double clicked on the business that somehow got linked on the form (look at the bottom of the form.)

After double clicking on my business, a pop-up window came up and I clicked on the REMOVE LINK button. That fixed my problem.

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S_H_B

I linked to my business intentionally, because the premium payments should be deductible as self-employed health insurance. The question is whether the excess advance payments need to be subtracted from the deductible amount, because they do not have to be repaid this year. Turbo tax includes that amount in the deduction, but if you remove the link, then none of the marketplace premium payments are deductible.

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tcar2000

I am self-employed. I pay for my own healthcare on the exchange. I receive no premium tax credits to help pay for the premiums.

My total healthcare premiums (regular and long-term care) equaled $14,491. That is what I entered on the Self-Employed Health and Long-Term Care Insurance Deduction Worksheet.

However, Turbotax filled in $27,559. on line 16 Schedule 1 of the Adjustments to Income section. Turbotax added the note: “A self-employed health insurance adjustment of $13068.00 from premiums paid through an exchange is included as an adjustment to income but does not appear on these worksheets.”

Adding this extra amount is incorrect, but I cannot find a way to delete the extra amount Turbotax added. How can I correct my tax returns?!

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BillM223

Was the amount of your LTC premiums $1,423 (the difference between $14,491 and $13,068)?

If so, then on the line where you entered the $14,491, just enter the $1,423. As I recall (it's been a month or two since I looked at this), the TurboTax amount from the 8962 is added to whatever you enter.

If that doesn't work, please come back and give me the line number on the worksheet, and I see what I can do with it.

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T

tcar2000

No. All of my income comes from self-employment. The amount of regular marketplace exchange healthcare premiums = $13,070. The amount of long-term healthcare premiums = $648. I receive no premium tax credits. My self-employed income is well over the cost of my healthcare premiums.

I get the message: "A self-employed health insurance adjustment of $13068.00 from premiums paid through an exchange is included as an adjustment to income but does not appear on these worksheets" on the Self-Employed Health and Long-Term Care 2020 Insurance Deduction Worksheet. I cannot remove this incorrect adjustment that Turbotax is adding, so Turbotax fills out line 16 Self-employed health insurance deduction with $27,559. This number is far above what I paid in premiums, so it cannot be right.

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mrbud

I am encountering the same problem (described below) while doing my 2021 taxes.

Is this a TT bug that has not been solved since last year?

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RobertB4444

@mrbud When entering your own "self-employed health insurance deduction" do not include the amount from 1095-A. TurboTax is going to enter that amount for you. Enter any other premiums paid and the amount should be correct.

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