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Why is my self-employment health insurce being limited?

Forum|Forum|4 years ago
March 28, 2022
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Last year, I had 15,404 in Medical insuranc premiums after PTC. TurboTax is calculating 10445. Why?

Details:

My wife and I have a LLC with income reported on a Schedule K-1. The income is split 50/50.

99% of our income is from the LLC

My half of income ater 401K and SET deductions is greater than 15,000

Our combine income is greater than 400% FPL

Both of us made employer contribution (listed on schedule k-1) and employee contrbutions.

Our insurance was purchaced on the exchange

After inputing the 1095-A into TurboTax, Turbotax calulated our allowable PTC as 15,404, so my out of pocket health insurance cost was was 15,712 (premiums-PTC).

I had excess PTC which has to be repaid in the amount of 7,967 which makes sense

Questions:

1) Why is Turbotax calculating 10445 as my deduction? Tuebotax worksheets do not show this calculation?

2) We had 2 schedules k-1 (one each for my wife and I). I input them seperately into Turbotax. Should I have combined them and treated it as a single Schedule k-1 since it is the same LLC?

TurboTax Home & Biz Windows

Best answer by AliciaP1

If your Partnership Agreement has a provision for the partnership to pay your health insurance premiums, the Form 1065 and subsequent K-1s need to be amended to include the premium total as code M in box 13.

If there is a provision in the partnership agreement that you will pay your own health insurance premiums (like other unreimbursed expenses) then you need to mark that box on the "Describe the Partnership" screen after entering the K-1. The IRS worksheets to calculate the SE Health Insurance Deduction create a circular reference when you have a PTC payback situation. There is a workaround to correctly report your SE Health Insurance Deduction though in this case. Based on your 1095-A entry, you paid $7,750 in premiums after PTC and have a PTC payback of $7,523.

Please follow these steps in TurboTax Home & Business to correct your SE Health Insurance Deduction:

Within your return, use the magnifying glass icon to search 1095-A and click the Jump to link that shows at the top of the results
Click Continue and Edit on your 1095-A and ensure you have it associated with the correct K-1
Use the magnifying glass icon to search K-1
Click Update for Partnerships and Edit for the K-1 you linked the 1095-A to
Answer the questions and Continue through the interview until you get to the Describe the Partnership screen
Check the box for I personally paid health insurance and/or long term care insurance premiums for myself and my family and Continue
Since you checked the above box, you’ll see the Unreimbursed Partnership Expenses screen. Select Yes
Answer the questions (according to any unreimbursed expense provisions in your partnership agreement) until you get to the Any Self-Employed Insurance Costs? screen
Enter $4828 for Health Insurance Premiums You Paid Other Than Amount in Box 13M
- This is the difference between the premiums you paid during the year + the PTC payback less the $10,445 already reported as SE Health Insurance Deduction
You can switch to forms mode and see line 17 on Schedule 1 now reflects the total amount you are qualified to claim

@noname87

M

mglauner

Yes, you should enter each K-1 separately.

Have you reviewed the calculations on Form 8962? Since we can't see your return in this forum, click this link How is the Premium Tax Credit Calculated.

N

noname87Author

Right after I posted I realize combining the k-1 was a very bad idea.

As for the other questions. I have created another post and sent my return to an agent. Their respose was basically that I need to do my own research and calculate the deduction manually and use workarounds to get Turbotax to report the right values. Basically Turbotax does not caculate the correct answer. Very dosappointing after spending the money for the Personal and business edition. After Spending MANY hours it appears that TurboTax does not understand that if you make over 401% FPL that your deduction is not limited as long as your associate business income exceeds the deduction.

AliciaP1Answer

If your Partnership Agreement has a provision for the partnership to pay your health insurance premiums, the Form 1065 and subsequent K-1s need to be amended to include the premium total as code M in box 13.

If there is a provision in the partnership agreement that you will pay your own health insurance premiums (like other unreimbursed expenses) then you need to mark that box on the "Describe the Partnership" screen after entering the K-1. The IRS worksheets to calculate the SE Health Insurance Deduction create a circular reference when you have a PTC payback situation. There is a workaround to correctly report your SE Health Insurance Deduction though in this case. Based on your 1095-A entry, you paid $7,750 in premiums after PTC and have a PTC payback of $7,523.

Please follow these steps in TurboTax Home & Business to correct your SE Health Insurance Deduction:

Within your return, use the magnifying glass icon to search 1095-A and click the Jump to link that shows at the top of the results
Click Continue and Edit on your 1095-A and ensure you have it associated with the correct K-1
Use the magnifying glass icon to search K-1
Click Update for Partnerships and Edit for the K-1 you linked the 1095-A to
Answer the questions and Continue through the interview until you get to the Describe the Partnership screen
Check the box for I personally paid health insurance and/or long term care insurance premiums for myself and my family and Continue
Since you checked the above box, you’ll see the Unreimbursed Partnership Expenses screen. Select Yes
Answer the questions (according to any unreimbursed expense provisions in your partnership agreement) until you get to the Any Self-Employed Insurance Costs? screen
Enter $4828 for Health Insurance Premiums You Paid Other Than Amount in Box 13M
- This is the difference between the premiums you paid during the year + the PTC payback less the $10,445 already reported as SE Health Insurance Deduction
You can switch to forms mode and see line 17 on Schedule 1 now reflects the total amount you are qualified to claim