Turbotax Miscalculates Health Insurance Premium Deduction ( Home and Business 2023)

[TAXRETURNSFILER]

On our joint return, we list three  Schedule C businesses. We entered in the "step by step" for one business a health care insurance premium of $26,642. This gets transferred to form 7206, on lines 1, 3 and 14. 

However, on Line 17 of 1040 schedule 1, the health insurance deduction is listed as $53,222. That's almost double (but not quite) of what we entered.  (Btw, when we right-click in the forms view on the 53,222 figure on Sch. 1, ln. 17, the "data source" option is grayed out.).

From Sch. 1, ln. 17, the $53,222 figure gets included in the calculation for Form 1040, line 10.

We double checked all our  "step by step" entries for all three businesses, and, as mentioned, health insurance premiums were only entered once, for one business only, and for $26,642. 

We also generated a PDF copy of the tax return with all worksheets. On the "qualified business income deduction smart worksheet," for the one business for which we  entered health insurance premiums, line E5a lists 53,222 as the "self-employed health insurance for this business."

In the PDF, the 53,222 figure appears only  on that QBI worksheet, as well as the above-mentioned form 7206 and Sch. 1, ln.17.

What could possibly be causing the miscalculation? How can we fix it? Thanks so much . 

[BillM223]

So on the 7206s, the correct amounts paid are listed? The change happens when the data is transferred to Schedule 1 (1040)?

I made a test, using one business with health care premiums and the other two not, and even using 26,642 as the premium for the third business, and Schedule 1 (1040) showed the 26,642 that you would expect. 

So no guesses yet about what is different about your situation.

[TAXRETURNSFILER]

Yes, on the  7206 form (there is only one),  the correct amount is listed.  The change happens when the data is transferred to  Schedule 1 (1040), and the change is  also reflected on the QBI worksheet.

In case it matters, the primary taxpayer has one Schedule C  business, which has no health insurance premium payments.  The spouse has two schedule C businesses. Only one of those two paid health insurance premiums. 

[CatinaT1]

This is a know issue. You can sign up for updates here: Why isn't my MAGI on Form 8582 not including my full self-employment health deduction?

[TAXRETURNSFILER]

Thanks for replying. However, what you describe is not exactly our problem. It's not that  our health insurance deduction comes out to less than it should be . Rather, too much of a deduction appears, nearly double what it should be. I am thus concerned that this may be a different bug in the program. Tax returns are due in only approximately three weeks.

[TAXRETURNSFILER]

Following up on my last reply:

As a test, I changed the entry for health insurance premiums in the step by step from $26,642 to zero. The program, nonetheless, shows $26,580 of health insurance premiums. That $26,580 , of course, is the difference between  the correct  $26,642 health insurance premium amount and the incorrect $53,222 amount that the program inserts when I enter  the correct figure. In other words, the program is "inventing" $26,580 of health care premiums out of thin air. 

As a further test, both   after I changed the entry for health insurance to zero, I generated  a PDF return, with all worksheets. I searched for "26,580". Sure enough, $25,580 appeared in line 17 of Schedule 1-- even though "0" appeared in line 14 of form 7206. 

Even worse, the program does not allow me to manually override the error, neither in line 10 of form 1040, nor in line 17of schedule 1. 

In short, I cannot file my taxes. Please get back to me about this as soon as possible. Thank you.

[BillM223]

Note: this is a guess, but it may describe your puzzling issue.

Occasionally, a number in TurboTax gets "stuck". That is, a number is entered or generated, but when you go back, you can't see the screen any longer where this number was entered/created.

The only sure fire way to get rid of the number is to delete the object that it is in and then re-add the object. However, I don't have a clear way of figuring out which business is the "problem".

Is it possible that you entered the Health Care premium for one of the other businesses, then deleted it? If so, please delete that business and re-add it.

However, if you are sure  that you never accidently added a health care premium to either of other two businesses, then let me ask you about something that puzzles me at the top.

You said, "On our joint return, we list three  Schedule C businesses. We entered in the "step by step" for one business a health care insurance premium of $26,642. This gets transferred to form 7206, on lines 1, 3 and 14." 

Then, later on you said, "In the PDF, the 53,222 figure appears only  on that QBI worksheet, as well as the above-mentioned form 7206 and Sch. 1, ln.17."

So, did that 7206 have the 26,542 or the 53,222?

[TAXRETURNSFILER]

Thanks for replying. I am sure I never entered the $26,642 for the wrong business. Moreover, I can  go back and see what health insurance premium is entered for each business, and it is $26,642 for the correct business, and zero for the other two businesses.  Moreover, the error is  for $26, 580 (i.e., 53,222 minus $26,642) , which is not even for the same amount as the correct insurance premiums entered.

To answer your  final question: Form 7206   only lists the correct $26,642 figure.  (Note that there is only one  form 7206 generated, and for the correct business.) The incorrect $53,222 figure only appears  in the Qualified Business Income Deduction Smart Worksheet for the relevant business, line E5a,, as well as in Sch. 1, line 17. From schedule 1, line 17, the figure is then included in the calculation that results in an incorrect figure appearing on form 1040, line 10. 

[BillM223]

OK, let's (well, you) try this:

Go into that business interview and navigate until you see the question about QBI, change the answer to: "this business doesn't qualify for QBI".

Then go and delete the Qualified Business Income Deduction Smart Worksheet and any other QBI sheet associated with that business. Do you know how to do that? if not, you'll need to tell me if you are using the desktop software or the Online software.

Then go back through the interview for that business (yes, go all the way through it even after the QBI question) - I don't think you'll have to change anything except to say that it qualifies for QBI. Then see what happens.

[TAXRETURNSFILER]

I finally discovered the problem. In the personal interview, the step by step at some point asks one to check a box as to whether one's health care premiums were from self employment income. I had checked that box. This resulted in the miscalculation. If I uncheck that box, the error goes away.

In the future, there should be a line in that spot in the personal interview advising that, if one already entered employment premiums in the business section, one should not check the above-mentioned box in the personal interview.