Error in Turbo Tax Self-employed. When will they fix it?

[SE_in_SoCal]

This bug has been present since Obamacare (ACA) started and STILL hasn't been fixed. WHY?

The self-employed (SE) can deduct 100% of health insurance (HI) premiums above the line, thereby reducing the AGI.  If HI is obtained via ACA and advance premium tax credits (APTC) were received based on estimated SE income, the amount you should have received gets reconciled (8962) and any APTC underpaid or overpaid is resolved. For SE individuals, any excess APTC that has to be repaid then becomes part of the total HI premium cost and is deductible in calculating the AGI (Schedule 1, line 17 and 1040, line 29). Note that this has been confirmed by the IRS over and over. HOWEVER, TT Tax places the APTC repayment AS A TAX CREDIT on Schedule2, line 3 (and 1040, line 17). THIS IS A CRITICAL ERROR BECAUSE IT INCREASES the MAGI/AGI and results in an artificially low APTC credit or artificially high APTC repayment. This is a pathetic cop-out by TT because the IRS acknowledges the potential for a circular argument here. Well, TT, THAT IS WHAT WE are PAYING YOU TO calculate. FOR THE LOVE OF GOD, WHEN WILL YOU FIX THIS?  

[tagteam]

How do I contact TurboTax? (intuit.com)

[dmertz · Accepted solution]

For this situation TurboTax implements the iterative algorithm provided in IRS Pub 974.  This algorithm is guaranteed to provide a permissible result but will not always provide an optimal result.  To obtain a more optimal result, if one is available, the IRS requires you to determine the amount for the self-employed retirement deduction yourself with the limitation that the sum of the self-employed health insurance deduction and the premium tax credit calculated on Form 8962 cannot exceed the cost of the insurance.  In TurboTax this would require not telling TurboTax that this was Marketplace insurance established under the business.

[SE_in_SoCal]

@dmerz  Thanks very much for the response -- finally an answer that makes perfect sense.

Nevertheless, this is really unacceptable from TurboTax — at no point have I ever seen this described/explained by the software, and even TurboTax people I've called about it have said they have no clue, or know this is the case and obfuscate.  The issue with not telling TT that I got Marketplace insurance is that it is a lie and, presumably, the IRA receives 1095-A directly from Covered CA. Thus, since I have had Marketplace insurance since 2014, such a change opens me up for auditing. Additionally, TT supposedly "guarantees" that you are getting the best possible refund, which is obviously not true since this issue has cost me several thousand dollars over the past few years.  

Still — your response has finally given me a logical answer to this puzzle. Thank you!

[SE_in_SoCal]

@tagteam Thank you for the link — of course, you have to pay for an additional product to actualy speak to TT....