Making an entry on line 8 of the Worksheet for Schedule 1 will reduce the taxable portion of unemployment benefits. It does this by reducing the Adjusted Gross Income. This might give an accurate picture of tax liability for many people. However, for persons who purchase their health insurance through the Federal Government's Insurance Marketplace, this could be a problem. It's my understanding that the amount of insurance premium credit/assistance is based on ALL household income. This would include the non-taxable portion of unemployment benefits. My concern is that reducing the Adjustable Gross Income would create an understatement of income, resulting in a false overpayment of premium and an incorrect refund of premiums.
