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Calculation of self employed health insurance deduction

Forum|Forum|3 years ago
February 6, 2023
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I'm trying to figure out how Turbo Tax has calculated my self-employed health insurance deduction. I entered the amounts from my schedule 1095-A and received a tax credit. Nowhere did I enter the actual premiums that I paid. Turbo Tax has calculated a self-employed health insurance deduction, which I thought would have been the amount of premiums that I actually paid less the tax credit amount, which it is not. Can anyone tell me how the health insurance deduction is calculated by Turbo Tax based on the the amounts entered from Form 1095-A?

TurboTax Home & Biz Windows

Best answer by LisaNMex

I'm having the same problem -- credit and deductions figured by TurboTax don't add up to total premiums. I found the link below helpful. The Ferguson source is good--use it. I figured out credit and deductions using IRS instructions. It took me several hours and made my head spin--I felt I was going in circles and I was because it's an iterative calculation. I got the same answer as the Ferguson online calculator within about 10 dollars. But now I don't know how to override TT forms to enter a different AGI for premium tax credit (doesn't seem possible). And I understand that if I do, the tax forms won't be accepted online. TT seems to be lagging on this. It looks to me that the gain if we get this right will be about $250. Can't shrug that off. We may have to fill out our tax forms and send them in by mail. Hard to believe! I'll call TurboTax -- maybe they'll give a partial reimbursement? Basically the software isn't working properly for at least some self-employed people who bought health insurance through ACA. If you find out more, please share.

https://thefinancebuff.com/when-tax-software-gives-self-employed-wrong-aca-premium-subsidy.html

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MinhT1

The self-employed health insurance premium (assuming you have no insurance other than the Marketplace policy) is equal to your premiums in column A of the form 1095-A minus the advance payment of the premium credit in column C minus the premium tax credit you have at tax time.

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apangburnAuthor

That makes sense, but that's not what has been calculated by TurboTax. Column A 31849 - Column C 12730 - Credit calculated by TurboTax of 3692 = 15427. The self-employed health care deduction calculated by TurboTax is 13899. This doesn't make sense. Is there a bug in the program?

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LisaNMex

abangburn--

I have a solution to my problem. See this conversation thread.

https://ttlc.intuit.com/community/tax-credits-deductions/discussion/re-overriding-agi-in-form-8962-to-figure-premium-tax-credit-when-self-empl[product key removed]er/01/2864752/highlight/false#M275243

If I'm reading your numbers correctly (might not be), it looks as if TT credit and deduction is about $2500 short of total premiums paid. If you want to try solution that worked for me, use the link to Ferguson calculator to figure best credit based on your income (or follow IRS instructions, but they'll make you crazy). Enter deduction (difference between total premiums and best credit) in your business expenses (it will tell you not to do this). But first uncheck box indicating you bought health insurance through ACA. TT will then fill out 8962 showing best credit. Make sure deduction and credit add up to no more than total health insurance premium--I had to adjust my figures by $1. Good guidance and explanations in guidance above. Hope this helps.

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LisaNMexAnswer

I'm having the same problem -- credit and deductions figured by TurboTax don't add up to total premiums. I found the link below helpful. The Ferguson source is good--use it. I figured out credit and deductions using IRS instructions. It took me several hours and made my head spin--I felt I was going in circles and I was because it's an iterative calculation. I got the same answer as the Ferguson online calculator within about 10 dollars. But now I don't know how to override TT forms to enter a different AGI for premium tax credit (doesn't seem possible). And I understand that if I do, the tax forms won't be accepted online. TT seems to be lagging on this. It looks to me that the gain if we get this right will be about $250. Can't shrug that off. We may have to fill out our tax forms and send them in by mail. Hard to believe! I'll call TurboTax -- maybe they'll give a partial reimbursement? Basically the software isn't working properly for at least some self-employed people who bought health insurance through ACA. If you find out more, please share.

https://thefinancebuff.com/when-tax-software-gives-self-employed-wrong-aca-premium-subsidy.html

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apangburnAuthor

I'm wondering if there is a way to report a bug? Even if we could override the calculation it would be helpful.

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GeorgeM777

In response to your first post, your premiums are not listed on your 1095-A, and nor do you enter them into TurboTax. What is listed on your 1095-A and also what is entered into TurboTax is the premium amount for the second-lowest-cost Silver plan (SLCSP). The SLCSP is important because its price is used to calculate premium subsidies. You may not have been enrolled in the SLCSP; however, it is the plan that was used to calculate your premium credit.

The difference in what you were eligible to receive in terms of a premium tax credit and what you paid in premiums determines whether you will receive a refund or whether you need to pay additional tax.

@apangburn

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apangburnAuthor

I agree. The premium credit amount makes sense, but the amount of the self-employed health care deduction doesn't make any sense at all. I can't calculate it from any of the numbers that I input.

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LisaNMex

If you have the PTC from the calculator, subtract that amount from the total premiums for your 2022 health coverage reported in column A of 1095-A. This is your health insurance deduction. Put this amount into your business expenses. Then go to form 8962 to see the total credit shown (line 24). The deduction and credit should not be more than the total premiums. I had to adjust my deduction by $1.

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crstauf

It is pathetic that we have to figure this out ourselves. The point of TurboTax is to trust the software and not have to stress over whether the numbers are correct or not. Why is TT not fixing this?

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mahimahimom

Sounds to me that you just have to plug the correct numbers into TT.

Most people do actually NOT want to figure it out themselves. That is why most people buy TT!

They like the step-by-step and just plug in the numbers from a paper or a form in front of them,
and NOT have your head spinning by calculations (that the TT program makes for you).

Nerds like ourselves (I am a little one) are tempted to want to know exactly how what was calculated.

Most bail out after seeing the title in this thread - if they ever got there. Let alone read all the posts.

Begin thinking and calculating.

My conclusion is there is not a glitch.

The reconciling of the payments with AGI for purpose of self-employed deductions is slightly complex.

But at the basis of it: all logical, and you can think of it sitting on the couch, without any numbers in front of you.

Just thinking about what these premiums and credits are about ...

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Miltimus

Definitely can relate to headaches getting TurboTax to show healthcare credit and deduction values that made sense.

Phase I: Inadvertently entered the medical premiums in both the business health insurance deductions step-by-step *and* the PTC credit calculations step-by-step. (Slight difference in the two entries given the ever-so-slightly lower 1095A column A figure.) Ended up with a too-high figure in deductions that was about 160% more than what the total I paid for all healthcare insurances. And then there was a credit on top of that. Knew that couldn't be right.

Phase II: "Fixed" the business health insurance deduction by only leaving in the dental insurance there. 1095A stuff stayed in the credit calculation section. However, deductions plus credits ended up something in the order of $300 or so short of total premium expenditures.

Phase III: Added a line entry in the business health insurance deductions above my dental insurance entry for the $3 of premium insurance that was "not allowed" on the 1095A column A total. Note that my 1095 A figure was about $3 less than what I actually paid for the medical health insurance premiums, because some portion of my premiums were not deemed to be "essential medical benefits," and therefore were not eligible for the credit calculation. (Maybe there was a bit of vision benefit or health promotion hidden in my medical premiums?) Result was that suddenly the TurboTax total of my health insurance deduction plus the ACA credit came within $5 (rounding error?) of my actual total healthcare insurance expenditures.

Reflections: (1) The iteration calculations in TurboTax appear to be *very* sensitive to any numbers being off. Surprising that adding in the missing $3 seems to have fixed the calculations in my case. (2) Be careful of accidentally double-entering the medical insurance in both the business insurance deduction and APTC credit calculation sections of Turbotax. (3) Watch to account for any little smidgen of your premium that was not accepted in the 1095A column A totals. (4) I struggled with the Ferguson calculator. It seems to assume that the only relevant figures are on the form 1095A, and not clear how to find the MAGI for the final entry box - especially if you have dental insurance or a sliver of non-ACA eligible medical premium.

Unique situation, so no clue if this would be relevant for others, and no clue if the TT iteration for the credit is low or off. Only know that the deduction + credit finally equaled total premium expenditures. Unfortunately, TT call-in help was not able to help me identify the double premium entry problem. I had to crawl the interwebs to discover that.