1095-A and Self-employment Medical Insurance Deduction, Deducation is way lower

[noname87]

According to my records I paid $9,101 directly to the insurer + 6,479 repayment due to excessive PTC for a total of $15,508.

TurboTax states:

"A self-employed health insurance adjustment of $11,825.00 from premiums paid through an

exchange is included as an adjustment to income but does not appear on these worksheets."

My income form the Schedule k-1 far exceeds the insurance cost.

Update: I calulate it manually and I get a deduction on $15,309 after 5 iterations assuming I did it right.

Why is there a such a large difference? I understand that this is a circular calculaion but shouldn't the numbers be closer?

[RaifH]

Yes, you are correct, it is a circular calculation. Does your repayment amount on Line 2 of Schedule 2 drop to 2,724 when TurboTax determines your self-employed health insurance to be $11,825?

If your household income is not above 400% of the federal poverty line, your repayment amount may be dropping as your income decreases due to the health insurance deduction. 

[noname87]

No the repayment does not drop. I am way over 400%.

What I did was calculated my AGI without the deuction for self-employed heath insurance. Then calculated the allowed PTC. Substracted that from my health insurance premiums to determine deduction. Calculated AGI witth deduction, Then repeated the calulation for new PTC and deduction. Again substracted from orginal AGI and repeated calculations. I did this until the numbers for the ptc didn't change by more than a dollar.

Orginal deduction was 16,610 followed by 15,198 , 15318, 15308, 15,309

I believe this is right but I need to verify. 

Form 8962 calculate my repayment as $7967 which is what TT says I need to repay. However shouldn't this number be reduced based on the circlar calculation due to the above the line self-employed healthcare dedection? My allowable PTC based on 8962 is 14506 but based on the calculation method above it should be 15807.

[RaifH]

The IRS recommends two methods for performing the circular calculation, the easy way and the hard way. If the method you used is the same as one of these and you are getting different results than TurboTax computes, it would be helpful to have a TurboTax ".tax2021" file that is experiencing this issue.

You can send us a “diagnostic” file that has your “numbers” but not your personal information.  If you would like to do this, here are the instructions: 

1. Select Online from the top menu and Send Tax File to Agent. 
2. You will see a message explaining what the diagnostic copy is.  Click okay through this screen and then you will get a Token number. 
3. Reply to this thread with your Token number. This will allow us to open a copy of your return without seeing any personal information.  

We will then be able to see exactly what you are seeing and we can determine what exactly is going on in your return and provide you with a resolution. 

[noname87]

The token was 974812

Thank you. I spent a lot of time withPub 974 (2021), p63-65 and use the iteratve calulation method to calculate the deduction. Using this method the PTC was calculated as 18,249, the deduction was 12,867 based on a premium of 31,116.

update: I reran the numbers. I believe that the Deduction should be 15,304, AGI 153,181 based on a Premium of 31,116

[AmeliesUncle]

---

@noname87 wrote:

Update: I calulate it manually and I get a deduction on $15,309 after 5 iterations assuming I did it right.

---

Did the iterations come within $1 of the prior one?  If that doesn't happen, then TurboTax defaults to the simpler method, which in some cases can be drastically different.

You may consider contributing to a Traditional IRA (which will affect the calculation).  Sometimes even a small amount of contribution can trigger the calculation to work out nicely.

[noname87]

When I did the calcutions using Pub 974 Iterative Caculation Method, the difference was $.005. So yes the difference was less tha a dollar.

I cannot contribue to an IRA due to income.

[AmeliesUncle]

Oh, I misread that you said you were OVER 400%.

Yeah, the credit for when you are over 400% is new for 2021, and from what I've seen from other posts, TurboTax sometimes really screws up the numbers.   

If you are confident of your calculations, then this is what I would do: 

1. DON'T link your 1095-A to your business. 
2. Then go into the business section where it asks for health insurance, enter your net amount there. 

Hypothetically, doing that should make it all work out correctly.  But again, with the messed up calculations in the program, I'm not quite sure what the program will show.

[noname87]

Thank you for the suggestion. I will try that if the TT agent doesn't have a suggestion after looking at my return.

Not sure why I buy this program if I can't trust the calculation. Nothing it perfect but situation is not that uncommon.

[noname87]

I tried your idea but it didn't work. I suspect that to do what you suggested that I need a business that has income if I want to add the medical cost under the business section.

[AmeliesUncle]

Oh, I forgot you said K-1.  Go into the K-1 section and check the box about medical insurance, and enter it there.

[noname87]

It look like I can be a brute force method as you suggest and then the rest of the number look right.

[DawnC]

The method AmeliesUncle describes above will work to get the Self-Employed deduction on Line 17 of your Schedule 1.      When you unlink the 1095-A, TurboTax will enter the premiums on Schedule A.    If you are itemizing, you will need to adjust Schedule A to make sure your premiums are not double-deducted.   

[noname87]

So Turbotax answer is: Research the IRS publicatins and do your taxes manually and then fill in the numbers in TurboTax using whatever workarounds need to override the TurboTax calculations and hope Turbotax still lets you file electronically. Got it.

Another work around I found was to do the calculations manually then enter the difference between that calculation and Turbotax calculation as a health insurance premium in the outside expense section of the k-1 shedule. Seems to work.

My next question is why do I have to spend 10+ hours reading IRS publication, searching the web, posting, doing manual calculations and multiple IRS worksheels, digging through the Turbotax worksheets, all in effort to find out why TurboTax thinks my deduction is limited? Then trying various workarounds to see what will produce an accurate return. I buy this program so I don't have to do all that.

I apprciate all the suggestions, Honestly, I think the best answer is to try a different company next year. After using this program for 20+ years, it is probally time to move on. It is a great program for w-2 wage earners with simple deductions but appears to be lacking for others.

[AmeliesUncle]

I agree, it is crazy to use a program that doesn't do things correctly and doesn't guide you correctly.  Personally, if were you I would have asked for a refund a long time ago and gone elsewhere this year.