Calculation of self employed health insurance deduction

[Miltimus]

Definitely can relate to headaches getting TurboTax to show healthcare credit and deduction values that made sense.

Phase I:  Inadvertently entered the medical premiums in both the business health insurance deductions step-by-step *and* the PTC credit calculations step-by-step.  (Slight difference in the two entries given the ever-so-slightly lower 1095A column A figure.) Ended up with a too-high figure in deductions that was about 160% more than what the total I paid for all healthcare insurances.  And then there was a credit on top of that.  Knew that couldn't be right.

Phase II: "Fixed" the business health insurance deduction by only leaving in the dental insurance there. 1095A stuff stayed in the credit calculation section.  However, deductions plus credits ended up something in the order of $300 or so short of total premium expenditures.  

Phase III: Added a line entry in the business health insurance deductions above my dental insurance entry for the $3 of premium insurance that was "not allowed" on the 1095A column A total.  Note that my 1095 A figure was about $3 less than what I actually paid for the medical health insurance premiums, because some portion of my premiums were not deemed to be "essential medical benefits," and therefore were not eligible for the credit calculation. (Maybe there was a bit of vision benefit or health promotion hidden in my medical premiums?)  Result was that suddenly the TurboTax total of my health insurance deduction plus the ACA credit came within $5 (rounding error?) of my actual total healthcare insurance expenditures.  

Reflections:  (1) The iteration calculations in TurboTax appear to be *very* sensitive to any numbers being off.  Surprising that adding in the missing $3 seems to have fixed the calculations in my case.  (2) Be careful of accidentally double-entering the medical insurance in both the business insurance deduction and APTC credit calculation sections of Turbotax. (3) Watch to account for any little smidgen of your premium that was not accepted in the 1095A column A totals. (4) I struggled with the Ferguson calculator. It seems to assume that the only relevant figures are on the form 1095A, and not clear how to find the MAGI for the final entry box - especially if you have dental insurance or a sliver of non-ACA eligible medical premium.  

Unique situation, so no clue if this would be relevant for others, and no clue if the TT iteration for the credit is low or off.  Only know that the deduction + credit finally equaled total premium expenditures.  Unfortunately, TT call-in help was not able to help me identify the double premium entry problem.  I had to crawl the interwebs to discover that.  

[SE_in_SoCal]

I'm still looking for an updated answer to this —  as far as I can see, this bug has not been resolved by TurboTax. The problem (for me) with your answer is "Based on your actual income for the year". For self employed individuals, "your actual income for the year" (I assume you mean AGI) is dependent on the amount of HI premium paid. Thus, if I deduct the actual premiums paid during the year ONLY,  then my ending AGI requires me to repay some of the APTC. But then, if I calculate the AGI deducting both the premiums paid during the year AND the repayment APTC (which is the actual total that I will have paid for my insurance), then my AGI  drops and the amount of APTC I need to repay is lower than the amount I used to calculate the AGI and that APTC repayment...... This is impossibly circular.

Why hasn't Turbo Tax corrected this?

[LisaNMex]

My head is not in taxes yet, but looking back at this thread, my advice (as long as Turbotax hasn't changed) is:

Use the Ferguson calculator referenced on this webpage, which is all about the circularity of the calculation. You will enter your income BEFORE any ACA deduction.

https://thefinancebuff.com/when-tax-software-gives-self-employed-wrong-aca-premium-subsidy.html

This is the procedure that worked for us last year. We told Turbo Tax that we DID NOT purchase our insurance through the marketplace (we did purchase it through the marketplace--but saying we didn't allowed us to get around TT glitches). I used Ferguson calculator to determine PTC and self-employment deduction based on our income. I used this info to enter self-employment deduction in business expenses, where by the way the guidance is NOT to do this (ignore). TurboTax then correctly figured premium tax credit on the PTC form. I made sure deduction and credit did not equal more than total premiums for health insurance. Make small adjustments to the self-employment deduction if they do.

[Vanessa A]

@SE_in_SoCal 

"Based on your actual income for the year". For self employed individuals, "your actual income for the year" (I assume you mean AGI) is dependent on the amount of HI premium paid.  

Sorta, your actual income for the year for the APTC would be your Modified Adjusted Gross Income.  Your MAGI is your AGI plus untaxed income such as excluded foreign income, untaxable social security benefits and untaxed interest income. 

 But then, if I calculate the AGI deducting both the premiums paid during the year AND the repayment APTC (which is the actual total that I will have paid for my insurance), then my AGI  drops and the amount of APTC I need to repay is lower than the amount I used to calculate the AGI and that APTC repayment.  

Yes, this does seem like a circular problem, but there is a workaround. You can either adjust how you enter your premiums or you can make a self-employed retirement investment as stated by dmertz in this link. 

[glsnpc5]

This is not working on my tax return.  Form 1095-A column A is $8,375, Column C is $4,884, and I am due a premium tax credit of $406.  Using your explanation, my self-insured health deduction should be $3,085.  However, it is being calculated as $2,873, a number that I cannot find on any schedule or worksheet provided by Turbotax.  In addition, schedule 7206 Self-Employed Health Insurance Deduction shows zero on the final line 14.  

I do not file electronically, but I print out the forms and mail in my return.  Should I include schedule 7206 even though it does not relate to the actual calculation of the deduction?

   Please let me know why there is a difference in the calculation, and which is correct.

[CatinaT1]

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[mahimahimom]

Sounds to me that you just have to plug the correct numbers into TT.

Most people do actually NOT want to figure it out themselves.  That is why most people buy TT!

They like the step-by-step and just plug in the numbers from a paper or a form in front of them,
and NOT have your head spinning by calculations (that the TT program makes for you).

Nerds like ourselves (I am a little one) are tempted to want to know exactly how what was calculated.

Most bail out after seeing the title in this thread - if they ever got there.  Let alone read all the posts.

Begin thinking and calculating.  

My conclusion is there is not a glitch. 

The reconciling of the payments with AGI for purpose of self-employed deductions is slightly complex.  

But at the basis of it: all logical, and you can think of it sitting on the couch, without any numbers in front of you.

Just thinking about what these premiums and credits are about ...

[lac528]

@LisaNMex I appreciate this post of yours and see from this post and another of yours in another thread that I'm struggling with some similar things to you regarding TurboTax calculating the SEHID, though maybe not exactly the same. Would you be willing to read over my post about my situation and see what you think? It's here:

https://ttlc.intuit.com/community/tax-credits-deductions/discussion/turbotax-giving-way-too-high-of-...