Self Employed Health Insurance Deduction and ACA Coverage

[johnosen35]

I am using TurboTax Home and Business for 2021.  It is limiting the self employed health deduction to $2700 and placing the remainder on Schedule A.  I have sufficient income on Schedule C for 100% deduction from AGI.  In early February the program only had me repaying $2700 of APTC.  I need to repay 100%.  Since updates it has repayment of APTC at 100% but now only allows $2700.  I have tried reinstalling the program on my PC and verified the error starting a new clean tax return.

[VolvoGirl]

You have enough gross income on Schedule C or Net Profit?  Is the Net Profit enough?

[johnosen35]

Yes. As noted in my posting.  For reference I am a CPA Tax Preparer.  The program is limiting my health insurance deduction to the 2020 APTC repayment limit along with the difference in total premiums less APTC on the 1095A. This is even though I am repaying 100% of APTC.

[johnosen35]

No program fix as of Feb 16th.  If you have self employed health insurance make sure the numbers make sense prior to filing an incorrect tax return.

[johnosen35]

No fix as of March 1st.  

[AmeliesUncle]

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@johnosen35 wrote:

 It is limiting the self employed health deduction to $2700 and placing the remainder on Schedule A. 

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A common situation where that happens is when the program is using the Iterative calculation for the PTC and SEHI deduction, but the calculation does not quite work out smoothly.

The program further can get jammed up if the Iterative calculation is jumps back and forth between the 400% Poverty Level threshold (although this year that threshold is softer).

My first suggestion is to enter an amount for a Traditional IRA (assuming it is deductible, or if you already have that maxxed out, try reducing the amount you entered).  Then see if numbers work better (and you may need to try a few different amounts of Traditional IRA contributions).

If the IRA contributions suddenly make the numbers make sense, then the 'problem' is what I had mentioned at the beginning, and there won't be a 'fix' (other than you making a Traditional IRA contribution or manually calculating things and overriding the software).

[johnosen35]

Based on this response I would not recommend anyone who is not a tax expert and self employed to use TurboTax for 2021 returns. 
 
The earliest I could file would have had me underpaying taxes by over $10,000. After updating it would have had me overpaying by $8,000. 

It worked fine in 2017 and 2018. It is a program error.  Now to enter it all in Taxslayer. What a pain. 

[AmeliesUncle]

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@johnosen35 wrote:

Based on this response I would not recommend anyone who is not a tax expert and self employed to use TurboTax for 2021 returns. 

It worked fine in 2017 and 2018. It is a program error.  

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Yep.  If you knew the amount of errors ...

The errors have been there since 2014 when the Premium Tax Credit started (and I boldly pointed out the errors to the developers then, but they refused to correct things).  It is potentially a two-fold error:  One of which is technically allowable and TurboTax takes the conservative easy way of dealing with it.  The second is is an error.  But often your specific situation will not 'trigger' the error.  It is only happens under certain mathematical conditions.

You may also consider TaxAct.  I like the data-entry in the forms in TaxAct, and although not quite a automated as TurboTax, from what I've seen it gives a good output.

[johnosen35]

Had to file by paper using Taxslayer Pro since it does not have form 1116 Schedule B either. The TurboTax tax refund calculation was off by $8000 due to not allowing deduction for self employed health insurance. This has definitely been my worst experience ever using TurboTax in the past 20 years. They must have lost a lot of programming talent. 

[wmpyoungx]

Johnosen35, 

With regard to the deduction for self-employed health insurance, are you referring to the adjustment to income that would populate Line 15 on Schedule 1? What was the rationale for not allowing the deduction? Did you try redoing Schedule C and SE related step-by-step input? That has worked for some users after updates according to user posts.

Or the the inclusion of that adjustment amount in Line 3b of Form 1116? I was surprised to see this amount included as the Form 1116 instructions for 3b refer to "deductions that don't definitely relate to any specific type of income [e.g., alimony]".

Or both?

Tax compliance (and programming) of COVID-related changes in 2020 and 2021 have been challenging for sure.

[wmpyoungx]

Just saw your earlier post in mid-February.  More complicated than I first realized.