ACA premium tax credit

[TJ100]

Turbotax is not working as far as the ACA once again.  It is adding the ACA overpayment to the tax you may owe and then using this number to base any penalties owed.  In other words there is "no added penalty for taking extra subsidies".  The software should ONLY be looking at the tax you would owe "without" adding the ACA over payment to is (and then base a penalty on this number).  So if say you owe  $500 in taxes and you also owe $2,000 for a ACA overpayment your taxes owed are $2500 which is over $1,000 and Turbotax in now adding a penalty.  But in reality turbotax should only look at the $500 you owe (and not the added $2K ACA overpayment) and therefore you do not owe ANY penalty - what out!

[hbl3973]

TJ100,

Yes, you are indeed correct.  While IRS Notice 2015-9 states it is only for 2014 returns, their logic and citations still apply.   I'll forward the issue to the powers that be.

[hbl3973]

TJ100,

Unfortunately, one of the experts dug into this and found that the repayment is included in Form 2210 underpayment calculations since as far back as 2016. 

If the ACA add-on was the only reason for triggering Form 2210, you can request a waiver based on your specific circumstances, e.g. first time encountered and ignorance of this issue, by checking off the waiver request box and including a statement of circumstances.  After all, this is rather obscure and fairly rare for the average taxpayer to encounter.  Could be worth a try, IMHO.

[TJ100]

If you have to pay back a ACA subsidy overpayment then it's stated:  "After all, it's impossible to know the future. It's normal for most people to overestimate or underestimate their ACA premium tax credit by a small amount. There's no added penalty for taking extra subsidies. The difference will be reflected in your tax payment or refund.  So, you are not or will not be penalized for having underestimated you income a year earlier  - however in Turbotax, they are taking what you owe in taxes (in my case which is under $1K) and then they add the ACA overpayment I owe (which now makes my total due over $1K) and therefore is calculating a penalty that I now owe.  So, basically Turbotax is penalizing my ACA Subsidy Overpayment and this should not be the case!

[hbl3973]

TJ100,

Unfortunately, that particular quote does not to originate from an IRS publication or website according to Google and hence would not be authoritative.  But do please share the link you copied it from.  It could prove useful in requesting a waiver.   It appears it refers to the section 5000 mentioned in the notice I pointed to earlier which did state that there isn't a direct penalty imposed by ACA on taking too much advanced payment.