Federal return rejected: Self-Employed Health Insurance Deduction on Schedule 1: Additional Income and Adjustments to Income

[smithscl]

Thanks.  So crazy we had to go through this.  Very disappointing the ZERO response from TT.

[Laura22334455]

My re-filed return was accepted yesterday (May 1), with no change to any numbers on my return. Turbo Tax itself hadn't even "updated" in days...wondering how long ago I could have actually re-filed! Oh, well, just happy it's done; now awaiting my refund!

[AGP11]

To all on this forum:

Like many others, I'm super disappointed with TT Year. I've been using the product for about 20 years - Getting worse with each passing year.

While reluctant to resubmit (since many on this post haven't seen any change in numbers), I'll probably do the same to get this wrapped up. While I'm not a tax expert, it doesn't make sense to me. As it relates to the PTC (premium tax credit) and the American rescue plan this year, form 8962 is not required to be filed (and not carried forward into Schedule 2, Part 1, line 2-3. All this makes sense. What doesn't make sense is that while that doesn't need to be repaid, theoretically, it should not be bundled into the income adjustment and taken as a deduction - Line 16 of Schedule 1 (Self-employed health insurance deduction) as that money was not paid out. I think that number needs to change, offsetting the PTC??

What does this mean in the end? Will our taxes be accepted and then later on we get a letter from the IRS stating we have to amend out taxes and pay more? Any help from tax accountants on this forum and Turbo Tax would be helpful in clarifying this point

I'll probably re-submit mine to get them over the finish line, but will assume that I'm not totally out of the woods this year, despite a potential acceptance notice from both the Fed and State.

[dan_e_t]

I am the original poster for this thread.  Just logged in this afternoon, same error message on my main screen.  Nothing looked different, the refund totals were still the same.  I resent in my federal return, and it was accepted a short time later.  Skeptical this is the end of the line, but at least the wheels are in motion for me to get my refund.  Haven't filed my state return because Minnesota is STILL trying working out the rules for businesses that accepted PPP money.  I'm just filing an extension on my state return until they get their poop in a group.

[zacknauth]

Thank you for the update. I see the errors on mine, which I am unable to change because they are "calculated" numbers from the program. I am not going to send in my return to have it accepted when I know there is an error. I will continue to wait for TT.

[smithscl]

I went ahead and submitted this afternoon and shortly after Fed accepted and then 3 hours later State accepted.  Hopefully it will stick.  Nothing appeared to be any different which is why I was hesitant, but it did work.  Obviously something in the system needed correcting.  Best of Luck to all.

[r_stearns]

After being rejected twice (so hard on the self esteem), I waited and checked for updates since April 30 and there have been none.  I continued to watch the message to wait for notice from TT  and gave up this AM, and now have resubmitted.  Fingers crossed.  Trying to pay your fair share shouldn't be this difficult.

[kck1]

I hope this may help you all.  It seems like I am the only one who got the following messages.  TT went through a update process when I loaded it. (don’t know if related to this issue or not), I went through 1095-A part over again, went through Reviewing, checking of the returns, checked out ok.  And then the following messages:

“Your new tax break might affect how you file.

You get additional tax relief as part of the American Rescue Plan because you told us you took an Advance Premium Tax Credit.  We’re working with the IRS on changes required for those …….  who were self-employed.  We recommend you wait to file while we work on making these changes.

HERE’ WHAT YOU CAN DO:

1. Wait to file while we work to make updates.  We’ll save your return and notify you by email once everything’s ready.  We expect to have everything updated by the end of April at the latest.
2. Or file now before all updates have been applied.  This could mean you’ll have to amend later.”

CONTINUE TO FILE          or          WAIT

So, I think TT may be implying that we can file now and be accepted albeit maybe deficient.  I would wait a few more days.  BTW, there’s no changes in refund amounts.

[Laura22334455]

Well, I don't think so because that "wait to file" message has been the same since Apr 15 when my return was first rejected, 2 days after filing (when I filed, there was no such message). End of April has come and gone. Re-submitted return May 1 with no changes made and it was accepted by IRS. I really don't think there's any further updates from Turbo Tax to come on this...

[AGP11]

Same result as many others. Consistent message on TT covering American Rescue Plan and options to consider: Wait, or Continue To File. I updated the software today (again), no change in numbers, but filed nonetheless - I couldn't hold off any longer. Fed and State accepted after re-submitting. If it comes to light that they need to be amended, I'll deal with it down the road (like the rest of TT users that were impacted).

I would be surprised if anything else will come from TT to remedy this particular situation, given they are now being accepted by the IRS. Good luck to the rest of the folks on this thread!

[zacknauth]

kck1 -- Yes, I got that message also, and have been getting it for several weeks. I continue to wait to file because I can see that my self employed health insurance deduction on Schedule 1 includes $2000 in excess advance PTC that should not be on there. If I submit like this, my return will have an obvious error, and I will receive a larger refund than I am entitled to.

[zacknauth]

I talked to a TT specialist at length this morning. She looked at my return with me, and clearly understood what was going on. She stated that the IRS had decided to overlook the fact that some returns were going to claim more self-employed health insurance deduction than entitled to, due to excess premium tax credit owed on Form 8962, Line 29 (this form is not submitted to the IRS) She said I should simply resubmit the return, and it should be accepted--as several posters on here have mentioned. I did so, and am waiting to see if it is accepted

[lordmuggins]

Oh wow so the system has claimed too high of a deduction? May I then be liable for further payment ..??

[smithscl]

Thank you for the great insight.  Hopefully this will be a non-event for everyone.

[Laura22334455]

Well...here's my experience. For years now, TurboTax hasn't handled this properly; it would calculate the amount of the self employed health insurance deduction incorrectly. Previously, I was able to override the amount and fix it myself. The last few years, I couldn't override it, couldn't fix anything on any worksheet or form to make it calculate correctly, so I gave up and filed anyway, and all has been well so far.

This year, TurboTax had 2 problems. The original problem above. AND, the problem due to the change in tax law making repayment of excess subsidies unnecessary. While Turbo Tax was able to fix the software so that it showed $0 due on the proper forms for excess subsidies received, when we filed initially, these returns were rejected by the IRS. Now these returns with the original error in the self employed health insurance deduction seem to be being accepted again by the IRS. In my case this year, the difference between the amount TurboTax calculated and the correct amount was very small, so I'm not worried about it. But I do wish it was something that TurboTax could fix...(Years ago, I talked to several TurboTax reps at length, and they couldn't fix the error either).