Form 7206 Line 1 is Incorrect

Forum|Forum|2 years ago
February 8, 2024
6 replies
74 views

I'm self employed and buy health insurance on the Exchange and I'm entitled to ACA credits. This means that TT allocates my premiums between SEHID and ACA credits.

TT seems to be doing this correctly, but Line 1 in 7206 doesn't reflect the allocated Exchange premiums from 1095-A. Instead there is a note on the bottom of 7206 reading:

"A self-employed health insurance adjustment of $[______] from premiums paid through an
exchange is included as an adjustment to income but does not appear on these worksheets."

TT: Does that work? Has the IRS accepted this way of reflecting the premiums (even tho it makes various amounts in 7206 incorrect)? Could you at least change "these worksheets" to "this form".

TurboTax Home & Biz Windows

CatinaT1

Level 15

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submicron

Level 2

Line 1 is not supposed to include amounts already included on Form 1095-A. This line should include premiums paid in excess of the amount on Form 1095-A, if any. In my case, the premiums I actually paid were $143 more than what was shown on Form 1095-A. This is because the plan I picked contained some coverage above and beyond what the ACA mandated. The problem I am having is that TT is adding this $143 back in to the MAGI calculation on Form 8582 (Passive Activity Loss Limitation), which it should not. TT refuses to admit the error.

CatinaT1

Level 15

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submicron

Level 2

Good afternoon,

The token number is 1216333. I am running the desktop Windows 10 version of TT Home and Business with the latest update as of today (3/23/24). Here is a summary of the problem (which did not exist in TT 2022):

I am self-employed by an S-Corp. The total health insurance payments for the year were $12,346. Enrollment premiums reported on Form 1095-A were $12,203. The difference of $143 was entered on page 4 of the K-1 S Additional Information, under Outside Expenses, Self-Employed Health Insurance for more-than-2% S corporation shareholders, Line 1: Health insurance premiums paid or reimbursed by the S corporation that were not reported on Form 1095-A. This $143 was correctly carried over into (the new for 2023) Form 7206 by TT and the amount on Line 14 of Form 7206 is correct. A PTC of $6,105 is calculated on Form 8962, leaving a Self-Employed Health Insurance deduction on Line 17 of Schedule 1 of $6,242.

The problem is found on the MAGI worksheet for Form 8582, the Adjustment on the Self-employed health insurance line should be $6,242, which is the deduction shown on Line 17 of Schedule 1. Instead, it shows $6,099 (which is $143 less than it should be). When I right-click on the $6,099 and request "Data Source" a box pops-up stating "Schedule 1 SE Health $6,242"!! It seems pretty clear that TT is erroneously subtracting out the $143 from Form 7206. This incorrect MAGI is then used on Line 6 of Form 8582 and results in a reduction of the Passive Loss I am allowed to take.

Furthermore, the instructions published by the IRS for line 6 of Form 8582 make no mention of adding back any type of Self-employed health insurance deduction into the MAGI calculation.

I look forward to your reply and hope that this problem is resolved by TT soon.

Best regards,
Rick