Why would having a stock sale with a big loss result in my "Obamacare premium" not getting refunded, even though I have a "taxable income" of $0?

[ttax3]

If I fiddle with the "cost or other basis" making it look like I made *more* money on the sale, tt shows the premiums getting refunded.  But if I show the full loss, it sets the refund to $0.  Does that sound right?

[hbl3973]

ttax3,

Doesn't sound right to me.   Could be related to the ineligibility when MAGI is under the federal poverty level.  There is an exception. Let me investigate.

[hbl3973]

ttax3,

I haven't been able to reproduce it yet.  Didn't fail when I dipped income below the federal poverty line.  Could you share some figures?  The three 1095-A monthly numbers, the AGI before the stock loss, the stock gain/loss before the loss, and the amount of loss when the stock is included?  Also, number of people included in the health coverage?  I know it is a big ask...

[ttax3]

> Doesn't sound right to me.

Just hearing that makes me feel so much better. I know tax stuff can get weird, but my common sense just rebelled against this one.  And we're talking a good chunk of change, so I'm reluctant to just let it go.  I have plans for that money.

> The three 1095-A monthly numbers

A: 673.73
B: 990.03
C: 0.00

Repeated x 12.  Just me on the insurance.

> the AGI

Posting my actual AGI in a public forum seems questionable, but I can tell you that if I fake the numbers such that it just barely gives me the obamacare money, my AGI is 12880 (12879 fails). Given how close that is to my standard deduction (12950), that seems like it should be a clue.  But if it is, I'm not seeing it.  Also note that I either get all the money, or none of it.  Something somewhere is triggering that I'm not eligible as it passes that point.

I may create a fake return from scratch and see if I can recreate the problem with entirely fictitious data (ie something I'm prepared to share). Other than a couple stock transactions, my return is pretty simple. Which is part of what makes this so aggravating.

Thanks for taking a look.

PS In case it matters: I'm using the desktop version of tt premier, with all updates applied.

[AmeliesUncle]

The program seems to be doing it correctly.

You did not receive Advance credit, and your income is too LOW to qualify for the credit.  Unfortunately, that is how Congress wrote the law.

[ttax3]

<sigh> I was afraid it was going to be something ridiculous like that. "Too poor to qualify for aid" matches so exactly with what I'm seeing (and what I'd expect from congress) that I'm sure you're right that this is what's happening.

Do you spose there's some way to finagle this?

I know there's such a thing as "Capital Loss Carryover," but I barely understand it. I expect that generally you'd want to recognize as much of a loss as you can to reduce your income (and thus your taxes), but clearly it's biting me in the ass this year. Is there some way to 'carry' this loss over to next year?

Alternately, am I *required* to report the loss at all? I expect that for most people it's a benefit that reduces their taxes, so they'd want to report it. But if I don't want the "benefit" of being able to write off the loss, am I required to do so anyway?

Yes, I realize I'm grasping at straws. But we're talking several thousand dollars here.  A little straw-grasping before watching it all vanish seems warranted.

[AmeliesUncle]

Unfortunately, you need to claim the capital loss.  With the information you have provided, unfortunately, there isn't anything you can do now.

This is one example of my saying that 'the most expensive way to prepare your taxes is doing it yourself'.  A good tax professional would have potentially seen your situation last year, and advised you on how to prevent this type of situation.

[hbl3973 · Accepted solution]

ttax3,

I was able to reproduce your situation and, unfortunately, there's likely nothing you can do about it.  The flowchart on page 5 of IRS Publication 974 shows that it was the full column of zeros in column C that triggered it.  Had you even gotten one dollar of advance premium tax credit in that column, you would have been able to claim the PTC. Sigh.

As to possibilities of changing things at this last moment, all I can think of is that if you made traditional IRA contributions for 2022, you can choose to make them nondeductible, thereby raising your AGI.  You could alternatively recharacterize the traditional IRA contribution as a Roth IRA contribution with the financial institution handling the IRA though that would need to be accomplished by this Tuesday.

Come to think of it, if you had self-employment income and chose to apply out-of-pocket medical insurance premiums via schedule C to get a schedule 1 adjustment, you can go back and remove that from schedule C and leave it as a (default) schedule A medical expense.  That would increase AGI, too.  In any event, take a look at your schedule 1 items to see if there something you might remove.

I know this is grasping at straws, but don't the make bricks from straw?

[hbl3973]

As Amelia notes, there would have been the option to repurchase a losing stock or a substantially identical one within 30 days of the loss in order to generate a wash sale to negate its capital loss.  I had to do that back in 2007 for my son to avoid being dinged $308 in taxes for a $200 change in income.