Last year I asked about this for tax year 2023, and Intuit's response was to list the premium rebate as income, under miscellaneous income on Schedule C. (https://ttlc.intuit.com/community/taxes/discussion/re-where-do-i-enter-aca-health-insurance-premium-...)
Looking at this again for tax year 2024, I believe this answer may be incorrect, and here's why: For 2024, I received a premium rebate of $242. If I list that as miscellaneous income on Schedule C, my AGI goes up by $1201 due to the snowball of self-employment tax and how the healthcare premium tax credit is calculated; and I end up owing $251 more in taxes to the Feds + $41 more to the state. So the additional tax liability exceeds the additional income, which just doesn't make sense!
This isn't additional income, it's a reduction in the healthcare premiums I paid -- and as I'm finding out there's a big difference.
You said I should claim the recovery the same way I claimed the expense. The only way I can see to do that is to alter the data entered in Form 1095-A, for example reduce the premium paid by $242 for the month when I received the rebate. I **think** that ripples through the return correctly, and I end up owing an additional $43 Federal and $8 State. But I'm not at all sure if this is the correct way to account for this, and altering the 1095-A values from what the state marketplace sent me feels wrong -- in fact it feels like a great way to invite an IRS audit.
What is the correct way to handle this? What am I missing here?
