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domingo5
Level 2

Can I deduct my health insurance premiums, if I made more money than expected, self employed, and have to pay back the tax credit that I received through the marketplace?

can you explain this more?  turbo tax is splitting my repayment of the tax credit and applying $504 to the self employed health insurance and the rest to my medical but i want it to apply all of it to the self employed health insurance . When I over ride it my agi goes below the level and I don't owe it anymore and turbo tax is giving me back part of it so then I can't claim it.  If I let tt split the amount like it is doing then I owe $16k. I am not sure how to handle it. I have played with the numbers and I can't figure it out.

KathrynG3
Expert Alumni

Can I deduct my health insurance premiums, if I made more money than expected, self employed, and have to pay back the tax credit that I received through the marketplace?

The answer depends. Unfortunately, I cannot advise any further than to provide you with the tools to calculate your alternatives on the following worksheets. The following resource is exactly what you need to determine what to enter. Once you have that number, then you can proceed with reporting it.

 

See 2019 IRS Publication 974 Premium Tax Credit (PTC) page 56 Self-Employed Insurance Deduction and PTC which begins:

 

Self-Employed Health Insurance Deduction and PTC This part provides special instructions for figuring the self-employed health insurance deduction and PTC if you or your spouse was self-employed, you or a member of your tax family was enrolled in a qualified health plan in 2019, and you may be eligible for the PTC. Because the amount of the self-employed health insurance deduction may affect the amount of the PTC, and the amount of the PTC may affect the amount of the deduction, a taxpayer who may be eligible for both may have difficulty determining the amounts of those items. A taxpayer who may be eligible for both may follow the instructions in this part to determine amounts of the self-employed health insurance deduction and PTC that are allowable under the law.

 

Using the special instructions in this part is optional. If you are eligible for both a self-employed health insurance deduction and the PTC for the same premiums, you may use any computation method that results in reporting amounts that satisfy the rules for both the deduction and PTC, as long as the sum of the deduction claimed for the premiums and the PTC computed, taking the deduction into account, is less than or equal to the enrollment premiums.

Additional Resources for reference:

2019 Form 8962 Instructions and 2019 Form 8962

2019 Form 1040 Schedule 1 Instructions begin on page 81 and 2019 Schedule 1

 

CathyHC1
New Member

Can I deduct my health insurance premiums, if I made more money than expected, self employed, and have to pay back the tax credit that I received through the marketplace?

Question regarding repayment of ACA:

We repayed the entire outstanding premuim amount for 2018 when we filed out 2018 taxes because our income went over the limit. How do we deduct the $22,000 repayment when doing the 2019 returns. We had to repay because income was too high; if it was deducted, then income went down below limit negating the repayment. Makes no sense. One accountant said it should be deducted in this year's taxes as a medical expense. Another says we should redo 2018 taxes. IRS info is unclear and there is NO information to be found online outside of this. IRS pub says repayment could be medical expense for that year (2018).

Anyone know anything about this? Filed a return when you did repayment?

Critter-3
Level 15

Can I deduct my health insurance premiums, if I made more money than expected, self employed, and have to pay back the tax credit that I received through the marketplace?

If you had to pay back the 2018 advance credit that payback goes on  the 2018 return  which then allows an adjustment to income for the SE health Insurance deduction depending on the income from the SE ... any unallowed deduction is then moved to the Sch A by the program automatically to be used only if you itemize deductions.   NOTHING is reported on the 2019 return  ... that is how the rules are written for this situation.  Review the 2018 return ... did the program calculate it correctly ?   If not you need to amend the 2018 return.  

CathyHC1
New Member

Can I deduct my health insurance premiums, if I made more money than expected, self employed, and have to pay back the tax credit that I received through the marketplace?

It's the same issue someone else had from last year: the repayment is calculated based on income. If you deduct the repayment (which you would not yet have paid until you file), the MAGI goes below the limit saying you own nothing. Our CPA last year could not do that. It's not like you write out a check to the insurance company, then take the deduction. The repayment is based on the MAGI going over the income limits. That's where the confusion is coming from--and I've talked and met with 4 different CPAs and gotten no answer or different answers. Very frustrating!

 

Critter-3
Level 15

Can I deduct my health insurance premiums, if I made more money than expected, self employed, and have to pay back the tax credit that I received through the marketplace?

This is how it is handled in layman's terms ... I could site the IRS rules and instructions however your head will probably explode ... I have been doing taxes and teaching the tax courses for more than 25 years so here is the answer again ...  

 

If you had to pay back the 2018 advance credit that payback goes on  the 2018 return  which then allows an adjustment to income for the SE health Insurance deduction depending on the income from the SE ... any unallowed deduction is then moved to the Sch A by the program automatically to be used only if you itemize deductions.   NOTHING is reported on the 2019 return  ... that is how the rules are written for this situation.  Review the 2018 return ... did the program calculate it correctly ?   If not you need to amend the 2018 return.  

Suze8777
Level 2

Can I deduct my health insurance premiums, if I made more money than expected, self employed, and have to pay back the tax credit that I received through the marketplace?

I have this same dilemma. My income was high enough this year that I didn't qualify for the premium tax credit and had to pay it back. I think revised my health insurance payments on Schedule C and saved myself $1200. I consulted with Turbo Tax and this is the correct way to do it. I entered the information on my 1095 A under Medical in the Personal section. I hope this helps.

domingo5
Level 2

Can I deduct my health insurance premiums, if I made more money than expected, self employed, and have to pay back the tax credit that I received through the marketplace?

If  you don't itemize shouldn't the amount you have to pay back go to your se health insurance

Critter-3
Level 15

Can I deduct my health insurance premiums, if I made more money than expected, self employed, and have to pay back the tax credit that I received through the marketplace?

If you enter the 1095-A in the deductions section as directed by the program then the amount you end up paying out of pocket will be listed as an adjustment ... just enter the info ONCE by following the screen instructions carefully then review the return carefully later.  

 

 

AlSimmons5757
Level 1

Can I deduct my health insurance premiums, if I made more money than expected, self employed, and have to pay back the tax credit that I received through the marketplace?

Everyone has answered here regarding when you OWE money. But what if your subsidy wasn't enough, so now you're RECEIVING money on form 8962 as a Net Premium Tax Credit?

 

Do you have to subtract that amount from your Self-Employed Health Insurance deduction?

Critter-3
Level 15

Can I deduct my health insurance premiums, if I made more money than expected, self employed, and have to pay back the tax credit that I received through the marketplace?

Yes you do ... and the program will do so automatically.  

AlSimmons5757
Level 1

Can I deduct my health insurance premiums, if I made more money than expected, self employed, and have to pay back the tax credit that I received through the marketplace?

Thanks, @Critter-3

 

I actually haven't been using the software until recently, so I'm only now realizing that I haven't ever reconciled my Subsidy Repayments or my Net Premium Tax Credits with my self-employed health insurance deduction in the past. Oops. This is good to know.

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