Self employed health insurance deduction and excess advance premium tax credit

[Hiker23]

I am self employed filing on schedule C.  I purchased health insurance through the exchange for 2020 and received an advance premium tax credit.  It turned out my income for 2020 was higher than expected and I would not have qualified for the premium tax credit.  But, due to the Rescue Plan Act I am not required to repay the excess advance premium tax credit that I received.  However, turbo tax is taking the full amount of the health insurance premium as a deduction for self employed health insurance on Schedule 1 line 16.  In other words, the amount on my Form1095-A in part III column A is the same as the amount on Form 1040 Schedule 1 line 16 despite the fact that the excess advance premium tax credit on Form 1095-A part III column C was forgiven.  Is this correct?  It doesn't seem like I should be able to get a deduction for the portion I didn't have to pay.

Thanks for your help-

[MaryK4]

You should simply delete the 1095-A information- TurboTax has not been updated to prevent the Marketplace insurance being deducted for self-employment health insurance deduction.

[Hiker23]

I should still be able to take a deduction for self employed health insurance for the portion I paid, correct?  So didn't think I would be able to delete the 1095-A...

[DawnC]

You can enter the 1095-A, but don't link it to your business Schedule C and then manually enter the correct amount you paid as a Schedule C expense.    If you don't link it to your business, the medical premium deduction will go to Schedule A instead of Schedule 1.    See the Medical Expenses worksheet, Line 2b and enter a reimbursement of that amount (as a positive #) on Line 13a of the same worksheet to remove the personal deduction on Schedule A.   

If entered in the Schedule C section, the expense will go to Line 16 of Schedule 1.  

[Hiker23]

Hello Dawn,

Thanks for the information.  The work around process you described seemed to work and gave me correct numbers on the tax forms.  But TT returned two errors on the error check due to missing entries for the start month and end month on the "Business Related Premiums Information Smart Worksheet".  When I populate the start and end months to clear the errors the amount for the self employed health insurance deduction on Schedule 1 gets overridden and is incorrect again.

Is TT working on a fix for this?    If a fix is in the works, I'll just wait for it.  Otherwise I'm thinking the 1095-A input would need to be deleted as suggested previously.  I'm guessing other folks are having the same issue as well.

Thanks for your help.

[DawnC · Accepted solution]

Yes, we are working on it (fix timeframe unknown), but you can fix that error.   Go to Forms mode and click on the Form 1095-A.  Scroll to the bottom and make sure the form is not linked to the Schedule C and then underneath in the ''Months related'' - change both boxes to NO ENTRY.    Unlink the business first and then do the adjustment on Schedule A.   

[Hiker23]

Thank you DawnC, this solution worked perfectly.  It has an added benefit for me too.  The amount on my Form 1095-A Part III column A, Monthly Enrollment Premium, less column C Monthly Advance Payment of Premium Tax Credit did not exactly equal what I paid for the health insurance.  There were two drivers for this, one is that CT only includes amounts considered "Essential Health Benefits" in column A.  The other is that due to being a cash basis taxpayer, my Jan 2020 premium was actually paid in Dec 2019.  So your solution helped me report the SEHI deduction at the correct amount.  Very much appreciate your help.

[Frogger20]

I received the same "Schedule1_Self-Employed_Health_Insurance_Hold_Rule" error message when the IRS rejected my return on 4/15.

I have been waiting for a TT update, but nothing so far. I had been told 4/30 was the target date.

I just found your feedback.

I unlinked the 1095-A form from my schedule C per your instructions and chose "no entry" for the dates. 

I have a $0 in the Medical Expenses worksheet, Line 2b and no value on Line 13a of the same worksheet. My 1095-A columns A & C are the same value for 2020. The premium tax credit was exactly equal to my monthly enrollment premium. 

I am not attempting to deduct anything. I just want my info entered correctly so the IRS will accept my form. 

Thank you!

[dijou]

But what about those of us using TurbTax Online where Forms mode is not available?  My Schedule 1 line 16 "Self-employed health insurance deduction" amount is not correct and I cannot seem to change it.

[PullingMyHairOut]

I can calculate the workaround just fine for Federal, but then my State gets messed up.  I'm not sure how to adjust that one correctly.   I know it's not correct. Any idea how to adjust this (California, if it matters).  I still have the notice from TurboTax when I try to run error check to wait for an update.  Any idea when this will happen?  Taxes are due soon.  Thanks for any info.

[Dunk4]

I use TurboTax so I don't have to do all that.

Hopefully they will have the update done before May 17th.

I called yesterday and they told me that the fix was done, but after that one of the experts on here said it is not done.

[ARCHGUY]

Well now there's one day left and the error remains in place.

TT online there's no way to enter Forms Mode anyway.

Would have been great if TT had fixed this.

[ARCHGUY]

Why is this issue marked 'solved'?? 

TT will not permit me to file my taxes because of this.

Since I'm forced to use the online version, the 'workaround' proposed here does not apply.

[dijou]

@ARCHGUY - after working with Turbo Tax support, my issue turned out to be that I had included my Affordable Care medical premiums in my self-employment health care premiums entry.  Once I excluded them from there (I just put in my dental premiums), the right numbers flowed through my return since TT picked up the Affordable Care premiums from my 1095-A.   I did not have to do anything to exclude the excess APTC - they were not included to be paid back.  It's kinda odd, but it worked.

[Dunk4]

It was updated in the Home and Business version and I was able to file without getting the message after updating the software.