Advanced premium Tax Credit Forgiveness

Forum|Forum|5 years ago
March 19, 2021
1 reply
9 views

With the passing of the American Cares Act any money owed for Marketplace Subsidies is forgiven. However I saw last night when I was going to file taxes that I was still being charged in TurboTax for the amount I owed back. Does anyone know when Turbotax plans to update their software to reflect this forgiveness? If there is no planned update, does anyone know how I can utilize this forgiveness?

BillM223

Level 15

I imagine that TurboTax is waiting for guidance from the IRS on how they want taxpayers and tax preparation companies to handle the repayment of the Premium Tax Credit.

Just because the law was passed doesn't meant that TurboTax and other vendors have sufficient information on how to code this.

So far, we are given to understand by the IRS that taxpayers should not amend their returns yet, because the IRS is considering automatically refunding these amounts (in a way similar to how they say they will refund the taxes on the first $10,200 of unemployment).

However, because any self-employed taxpayers who have Marketplace insurance can deduct excess Premium Tax Credit (PTC) as part of the Self-employed health insurance deduction on line 16 of Schedule 1 (1040), this will have to be changed as well if the excess (PTC) is no longer taxable (if it's not taxable, then it can't be deductible, either).

My point is that this is all a non-trivial exercise since there are potentially many moving parts, and that everyone needs to hold their breath and let the IRS and the tax software vendors work through this.

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emgerstman1Author

Level 2

I understand it's complicated. I guess my underlying question is do I file taxes now and assume they will send me the tax credit refund when it's sorted out, or do I wait to see if I can get it included in my current refund. Either way I get a refund and I would rather not have to refile or do any extra steps later on if not necessary. I don't mind waiting a little longer if it makes sense.