How does TurboTax online calculate medical expenses for someone who is self-employed with a 1095-A?

[nsteph]

I cannot figure out how it is doing the math on either my federal or state filing.

I entered my self-employment income in Wages & Income and did not include my Marketplace premiums as an expense there.  I put my prescription and doctor visit costs in Deductions & Credits.  I entered all of the data from my 1095-A in the section dedicated to health insurance from the Marketplace, and I answered in the affirmative that I am self-employed and bought a Marketplace plan.  In the Federal deductions and credits summary, the Medical Expenses line appears to show a sum of those health/dental claims and the premiums I paid for my Marketplace plan (1095-A column A minus column C).  But the amount that appears on that line is a few hundred dollars lower than it should be.

I went back and deleted the data from my 1095-A, leaving just my health/dental claims, and the amount on the Medical Expenses line is correct.  Then I deleted that and retyped the data from my 1095-A, and the amount that appeared was incorrect by a few hundred dollars again.  I tried deleting and re-entering my 1095-A amounts several times, to no avail.  I also tried to delete the 1095-A form and re-enter it, but that did not change the miscalculation.  I even cleared my entire set of tax data and started anew… nothing seems to make a difference.  The calculation is consistently off by the same number.

Perhaps this is happening because I did not make much profit from my business this year?  Or because I have to repay some of the Premium Tax Credit?  Or maybe it’s because my 1095-A does not have the same amounts for each column in all twelve months?  My form does have the correct enrollment premiums in column A, the appropriate SLCSP in column B, and accurate premium tax credit advance payments in column C.  None of the amounts are 0 or blank.  The totals for column A minus column C match the amounts I paid my marketplace insurer in 2025.  But when I enter the data in TurboTax exactly as it appears, the total is off.

Obviously, this won’t count as a federal tax break if my medical expenses are less than 7.5% of my AGI, or if I take the standard deduction.  But the number that TurboTax calculates for those Marketplace plan premiums is carried forward to the Missouri adjustment for Qualified Health Insurance Premiums, and there again, it’s a few hundred dollars off.  That number cannot be corrected or deleted.

Is this a known issue, and is there some workaround to correct it, or am I just going to have to settle for an imperfect filing?

[nsteph]

I've made some headway on understanding this issue.

As to the question of whether I made enough profit in 2025, that certainly could have an impact on the calculations.  In this TurboTax article, I learned that the health insurance premium deduction can't exceed the earned income you collect from your business.  So I'll add that to the disclaimer that these calculations (the one for medical expenses as well as for self-employed health insurance) may be purely academic when it comes to federal taxes.

But that doesn't explain why the numbers don't add up, and an answer to that question is a bit more difficult to find.  Based on what I read in this community discussion, I have gathered that there's a sort of circular reference happening (the amount of the deduction is based on the amount of the premium tax credit, and the amount of the credit is based on the amount of the deduction), which requires an iterative calculation to solve.  That seems to have been a problem for TurboTax in the past, but it may be resolved now.  The takeaway is that the amount on the Medical Expenses line is not a simple sum of my health/dental claims and the premiums I paid for my Marketplace plan (1095-A column A minus column C).  My MAGI needs to be calculated before the self-employed health insurance deduction, and then it can be used to calculate the deduction based on the amount of subsidy I should have received.

The question that remains is what calculation should be used for Missouri, and I remain in the dark on that.  I have checked a competitor's online tax preparation site, and it doesn't allow any of my premiums to be deducted.  I will post here if I figure that out... hopefully this helps anyone who has similar questions!

[nsteph · Accepted solution]

I'm reporting back to say that the TurboTax calculations for federal and state do indeed appear to be using your current MAGI to calculate your ACA credit, then subtracting that from the monthly enrollment premiums (1095-A column A minus the total credit you qualify for).  This represents what you should have paid for your Marketplace plan, not what you actually paid (that would be 1095-A column A minus column C).

I underestimated what I would make in 2025, and have to repay some of the premium tax credits; this discrepancy, combined with the use of an advanced algorithm in TurboTax, meant I was seeing very different numbers than what I thought should be there.

But I suspect I may be an edge case for several other reasons as well... my earned income from self-employment was less than the cost of my premiums, so I had to go back and answer No to the question that asked if I was self-employed and bought a Marketplace plan.  However, this ensured that I qualified for the Missouri health insurance premium deduction (because I wasn't taking a federal one), and TurboTax automatically filled in that box with the correct amount (1095-A column A minus the total credit I qualify for).

I did make enough from self-employment to cover the cost of my dental insurance (which was purchased on the Marketplace, but no credits apply), so I entered that as a separate health insurance premium expense for my business.  Every little bit helps!

Anyway, I wanted to report back in case any of this helps those who might be in a similar situation.  Good luck!