Self-Employed Health Insurance Deduction (1040 sched 1 line 16) Unexplained Value

[BillM223]

May I assume that you had to pay back all of your Premium Tax Credit? Your health insurance expense would be the $10,400 that you paid, and the $8,000 that the government paid for you but which you had to pay back.

There is also some not-very-obvious interaction between your Schedule C net income and your contributions to Self-Employed SEP, SIMPLE, and Qualified Plans. 

Please see the 1040 Instructions (Schedule 1 instructions begin on page 84), especially for line 14, 15, and 16. Also see the Self-Employed Health Insurance Deduction Worksheet at the top of page 89. 

Since we in the Community cannot see your private tax data, I can't hazard a guess as to down to the penny, but if you had to pay back your PTC, then about $19k is close to correct.

@mikej724

[taxes4739]

Again, the issue here is that TurboTax spits out numbers without any information on how it got them, which pretty much makes it impossible to actually check its work.  Clearly I'm not the only person this is causing problems for.

It felt odd that it was doing this last year, but it utterly baffles me that a full year later, they still couldn't be bothered to fix it (despite this being reported here *and* despite my calling them to report it).  I'm again looking at numbers it's producing out of undocumented, black-box calculations and forced to just sign a tax return that I don't fully understand.

I'm really not able to understand why they neglect to fix issues in their software.

[taxes4739]

Correction: reviewing my notes, I actually reported this to them for the first time *two* years ago, but they just deleted the thread from this forum.  Thus, I re-posted again last year.

[mikej724]

We'll see what happens. I tried to use worksheet P and X in publication 972 to confirm the number turbo tax spit out but my head literally exploded trying to follow the iterative process to reconcile premium tax credit with AGI limit etc.

So in the end I went ahead and submitted the return with the number turbo tax entered. I really don't think that number is right since it's about 2x the amount of health insurance premiums we paid. We'll see what happens.

[mikej724]

yes super not comfortable submitting a return where i don't understand the number but i made every effort to reconcile this and the IRS publication 974 related to this isn't even available for 2020. So i went ahead and submitted it. Even if they approve the return (what are the odds they would catch it of the number is incorrect?) I still won't have an answer if the calculation was actually correct or if IRS is as confused by this circular relation of PTC and AGI as I am. 

[mikej724]

Regarding paying back the PTC that is exactly the issue.

If we pay all of the PTC back then our AGI is below 400% FPL so we'd become eligible to keep the PTC we had received throughout the year. If we get to keep the $8000 in PTC our AGI is too high to be eligible for the PTC. According to publication 974 TT is supposed to do an iterative calculation to figure out what our AGI is and how much PTC we can keep. I don't think it makes that calculation and instead just jumps straight ahead and assumes we have to pay back all $8000 and adds them to the $10400 we paid in insurance premiums and says we can claim $19000 in expenses against the self employment income. But then later when it comes to ACA stuff it then determines that we get to keep the $8000 in PTC. So TT gets confused by this circular relationship between AGI and PTC and doesn't seem to follow the process of calculation outlined in publication 974. Which btw is not yet available for 2020 so maybe that's why TT doesn't do those iterative calculations since the 2020 version of that publication is not available.

[LadyKel]

Exactly!!

[LadyKel]

I also reported it to them on Facebook, but they wanted me to call in so they can "help me".  No, how about you take the detailed information I am giving you, including the rules and guidance from the IRS and get it fixed!!

[MagneticBear]

The value randomly entered here for me is "-1." and TurboTax has asked me to review this value since it can not be a negative number. I've been trying to figure out how this number got here for a week now! Did you get any more information on your situation?

[KristinaK]

The first step I suggest you do is "unlink" your 1095-A from Schedule C, and then link it again. To do that, uncheck the box shown on the screenshot below. 

If that doesn't work, there is a workaround available for TurboTax Desktop version for this. Follow these steps:

1) Go to Forms Mode

2) Find 1040/1040SR Wks

3) Scroll down to the section with the negative number on line 16. 

4) Just above it you will see a box for Self-Employed Health Insurance Premiums Tax Credit Smart Worksheet. 

5) Remove amount from box B. 

For TurboTax Online, you have two options:

1) File an extension and wait for the fix. 

2) Do not claim the health insurance adjustment to income for self-employed. You can do that by unchecking the box for the question in the 1095-A interview about whether you were self-employed. See the screenshot. You can file an amendment after the fix comes through (TBD).

Here are instructions on how to amend your tax return.