Form 7206 Not Calculating Correct SEHI Deduction with Premium Tax Credit

Calculation of Self-Employed Health Insurance Deduction from S-Corp K-1, when also eligible for a Premium Tax Credit, results in an iterative calculation, since the SEHID affects the AGI, which determines the PTC, which then can reduce the allowed SEHID. The sum of the PTC and SEHID should be equal to (or very close to) the enrollment premium indicated on Form 1095-A. I can see TT go through the iterations while it is updating the SEHID note at the bottom of Form 7206. It gets closer and closer to converging, and then it goes off the rails on the final iteration and winds up short-changing the taxpayer by a lot.

BTW, this iterative process worked fine in 2022 and 2023.

posted