I'm working on a return where the handling of the Medical Expenses Worksheet, Line 2b is seems to be different from previous years and how TurboTax 2020 also handled it prior to an update installing.
I had my return mostly completed, but then TurboTax wanted to run an update. After the update, I noticed that my refund went down by $300. When I compared what was different now compared to a PDF that I had saved previously, I noticed that it was because TurboTax switched me from Itemized Deductions to Standard Deduction. Then when I looked at the Deductions worksheet, I found that my medical expenses had gone down, which put me under the Standard Deduction amount.
When I compared the Medical Expenses Worksheet to my saved PDF from before the update, there was a big difference in line 2b. Before the update, the amount in 2b was the total of all the amounts from 1095-A, Lines 21-32 (basically, total of monthly insurance premiums, before advance payment of premium tax credit). After the update, the amount in 2b is basically the total of the insurance premiums I paid out of pocket (after advance payment of premium tax credit). Obviously, the amount after the update is lower than before.
As far as I can tell, the method for 2b is correct after the update (calculate insurance premiums after the subsidy). Can somebody confirm this?
However, I went back a couple of years to check how this was handled by TurboTax previously, and it appears that it used the old method for 2b (gross insurance premiums before subsidy). So has it been incorrect the past few years and also this year prior to the latest update? Or did something in the tax code change?
