Thanks for taking the time.
Let me repeat the problem. The law is different for whether settlement proceeds are taxable and whether they count for MAGI on Form 8962. TurboTax, and for that matter, the IRS, don't seem to integrate this issue into the tax forms. This is probably NOT just a TurboTax issue.
To answer your question, I entered the 1099 info using the step-by-step method. For income tax purposes, TurboTax correctly carries this right through to schedule 1 and onto the 1040. The problem is that the 8962 form then just takes the AGI from the 1040, allows just a couple of internal additions and subtractions for social security, tax-free interest, and foreign income exclusion --- and puts that figure in as MAGI on form 8962.
But that's not the way it's supposed to work. That are many other things that are supposed to be deductible from form 1040 AGI before coming up with form 8962 MAGI, and there doesn't seem to be any way to do it. Thanks.
