Solved: I'm self employed and over estimated my AGI. Will I have to pay it back if my business expenses bring it below the threshold to qualify for a subsidy?
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Returning Member

I'm self employed and over estimated my AGI. Will I have to pay it back if my business expenses bring it below the threshold to qualify for a subsidy?

I purchased my insurance through the marketplace and received a subsidy that covers my entire premium. I anticipated making just above the amount needed to qualify for a subsidy. My state (SC) has not expanded Medicaid, so a subsidy is the only assistance I would be eligible for. My income would meet the requirements for the subsidy were it not for the deductions on schedule C. 


Will I be required to pay the entire subsidy back and will I be allowed to claim the premiums on my deductions as a self employment HI premium if I do have to pay them back? Also, my income situation will change next year as I am contracting with an additional company. Will this impact my ability to qualify for a subsidy in subsequent years?

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Level 9

I'm self employed and over estimated my AGI. Will I have to pay it back if my business expenses bring it below the threshold to qualify for a subsidy?

No, you will not need to repay the Advance Premium Tax Credit ("subsidy") that you received.

If you honestly submitted your estimated income and the Marketplace gave you Advance credit (they accepted your estimated income), you will not need to repay the credit.  In fact, if the credit had not already paid for your entire insurance premium, you would have received additional credit on your tax return.


For any future readers, a key word is "honestly" submitted your estimated income.  The law says that if a person were to intentionally lie on their health insurance application (such as falsely increasing income to receive the credit), the penalty is $250,000.

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Level 15

I'm self employed and over estimated my AGI. Will I have to pay it back if my business expenses bring it below the threshold to qualify for a subsidy?

@lynnlee722
Are you saying your income when using the Schedule C deductions will be below 100% of the Federal poverty level?

I'm going to ask @TaxGuyBill who is quite familiar with that healthcare topic and special circumstances to give you more info in this thread on Tuesday for that situation.
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Returning Member

I'm self employed and over estimated my AGI. Will I have to pay it back if my business expenses bring it below the threshold to qualify for a subsidy?

It's possible. If not it will be very close. I wasn't thinking about the start up cost deductions and the 50% of the SE tax that I can deduct. It may push my income just below the FPL.  Thanks for any info.
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Level 15

I'm self employed and over estimated my AGI. Will I have to pay it back if my business expenses bring it below the threshold to qualify for a subsidy?

Check back tomorrow.  I've notified TaxGuyBill, but you are unlikely to hear anything tonight.  But he should be able to address your advanced premium tax credit ("subsidy") and what happens if you have the unexpected low-income situation.
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Level 15

I'm self employed and over estimated my AGI. Will I have to pay it back if my business expenses bring it below the threshold to qualify for a subsidy?

Also see OP's earlier two posts.
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Level 9

I'm self employed and over estimated my AGI. Will I have to pay it back if my business expenses bring it below the threshold to qualify for a subsidy?

No, you will not need to repay the Advance Premium Tax Credit ("subsidy") that you received.

If you honestly submitted your estimated income and the Marketplace gave you Advance credit (they accepted your estimated income), you will not need to repay the credit.  In fact, if the credit had not already paid for your entire insurance premium, you would have received additional credit on your tax return.


For any future readers, a key word is "honestly" submitted your estimated income.  The law says that if a person were to intentionally lie on their health insurance application (such as falsely increasing income to receive the credit), the penalty is $250,000.

View solution in original post

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Level 15

I'm self employed and over estimated my AGI. Will I have to pay it back if my business expenses bring it below the threshold to qualify for a subsidy?

@TaxGuyBill
I think you typo'd above.  Please review  your first sentence.  Did you leave out a "not"?
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Level 9

I'm self employed and over estimated my AGI. Will I have to pay it back if my business expenses bring it below the threshold to qualify for a subsidy?

Oops, thanks.  I'll correct that to "No, you do NOT need to repay ...".

Thank you.
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Level 15

I'm self employed and over estimated my AGI. Will I have to pay it back if my business expenses bring it below the threshold to qualify for a subsidy?

"start up cost deduction"  Like what?  Not all of these are deductible.
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Level 15

I'm self employed and over estimated my AGI. Will I have to pay it back if my business expenses bring it below the threshold to qualify for a subsidy?

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Level 15

I'm self employed and over estimated my AGI. Will I have to pay it back if my business expenses bring it below the threshold to qualify for a subsidy?

If at tax filing time it is determined you do not qualify for a subsidy, or for a lesser amount, you will have to pay it back.

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New Member

I'm self employed and over estimated my AGI. Will I have to pay it back if my business expenses bring it below the threshold to qualify for a subsidy?

Carl, I need to repay the entire amount for 2018. Can I add that amount to Line 29 Form 1040 for self employed? But if I do that, then my adjusted income will qualify me for the subsidy - I will owe some repayment but not the entire amount. So, it is like a circle. What to do?
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Level 15

I'm self employed and over estimated my AGI. Will I have to pay it back if my business expenses bring it below the threshold to qualify for a subsidy?

@rimma_sophia
I'm going to ask @TaxGuyBill to assist you when he is next in the forum.  He provided the original answer in this thread. He's an expert in that healthcare tax/subsidy topic.  He can tell you what all you will need to do.
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Level 9

I'm self employed and over estimated my AGI. Will I have to pay it back if my business expenses bring it below the threshold to qualify for a subsidy?

On the screen immediately after entering (or editing) your 1095-A, you need to check the box that you were self employed.  Then the program calculate the 'circle' and should put the proper amount on Line 29.  So do NOT enter it again on Line 29, as the program does it automatically.

However, there are a couple of flaws when you are near the border of qualifying.  In some cases, the program does not calculate things correctly.  In other cases, the IRS rules don't give a clear way to do it, and the program doesn't do anything about it.

If checking the self employed box on the screen after entering the 1095-A does not qualify you for the Premium Tax Credit ('subsidy'), you may consider contributing to a Traditional IRA to lower your income, which would reduce the amount of the repayment.  You can 'test out' various amounts of Traditional IRA contribution amounts until you reach a level that would qualify you for the Premium Tax Credit (the healthcare 'subsidy').
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New Member

I'm self employed and over estimated my AGI. Will I have to pay it back if my business expenses bring it below the threshold to qualify for a subsidy?

I already added the max contributions to Traditional IRA and Solo 401K plan, and I am still about $6K over the level that would qualify for the PTC. I am also doing my taxes manually, without any software.
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