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Level 1

Self-Employed Health Insurance Deduction vs. form 1095-A entries

Bart, I am doing my taxes manually, without any software, so I cannot comment on how TT does it. However, if you want to have an idea what those iterations are, check out Publication 974. Warning: it is not for the faint of heart. Good luck!
 
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Level 12

Self-Employed Health Insurance Deduction vs. form 1095-A entries

TurboTax DOES do many iterations.  However, the 'fault' is that during the iterations, if the income goes over 400%, it incorrectly stops (which could result in only one iteration).
Level 1

Self-Employed Health Insurance Deduction vs. form 1095-A entries

TaxGuyBill, it only did one iteration with mine and my MAGI is below the 400% mark even before deducting any premiums. My total premiums for my wife and I  were $25,464 and we didn't take any APTC so at least that was simple. After the calculation the PTCs allowed plus the deduction allowed on line 29 only added up to only $24,569 ($895 short). I then added that $895 to line 29 and recalculated and after this iteration, the aggregate was $14 too much. On my 3rd iteration, I subtracted that $14 from line 29 and the resulting aggregation for PTCs plus line 29 deduction was $25,463, only 1.00 off! That saved me about $180. I suppose I could have gone and added that 1.00 to line 29 and done a final iteration but I didn't want to get picky 🙂

As an update, I am very happy to say that after all of these hours of frustration, I finally found a work around to my multiple 1095A problem on my own but it involves going against what TT tells you to do. As a reminder, when I entered my first 1095A, TT worked fine and actually might have done multiple iterations but when I entered the 1095A for my wife, it gave us the entire $25,464 of premiums as the PTC AND it entered that same $25,464 on line 29 as a deduction, resulting in a 100% PTC which is not right plus a $25,464 deduction on Line 29, which is DEFINITELY not right. Here is what I finally did: TT tells you not to enter any premium deductions in the schedule C (other common expenses) if you are going to enter any 1095As. It then goes on to tell you that the remainder of the premiums not reimbursed with PTCs will automatically be put on Schedule 1, Line 29. Obviously, this did not work for me as the PTC calculation after entering the second 1095A was wrong and the Line 29 deduction was extremely wrong when I did it that way. I had been kicking around the idea of going ahead and entering the full amount of premiums onto Schedule C before going to the personal health care section and entering the 1095s. I finally tried that and it worked perfectly! I entered the $25,464 in Schedule C (other common expenses) as if I didn't have any 1095s. Then I went and entered the 1095As and the calculation worked perfectly even though it only performed one iteration. By doing it the opposite of what TT tells you to do, after 2 additional iterations I ended up with $21,519 in PTCs and $3944 on line 29, which adds up to $25,463 (within $1.00).

To answer the other questions: rimma - unfortunately, I am not at all familiar with form 4562 and had nothing to depreciate this year but I feel your pain. TT really does make things in general a lot easier than the old paper and pencil method. Unless you just happen to hit on one of the glitches from rare situations, you will probably be glad you used it. Obviously it would have been 1000 times better for me to have done it on my own and saved so many hours with TT "experts" who were unable to help me and who ended up dumping me after many hours of trying. I will say that they were all very nice but there should be a way to work with one "expert" until the customer is satisfied. Even if I had done it myself, for this one issue I still would have had to learn a lot about calculating the PTCs when self-employed and rimma, you are right that learning about iterations are not for the faint of heart. IRS Publication 974 (Premium Tax Credits) is 78 pages long and the instructions for 8962 are 20 pages long. It makes me believe that a group of tax attorneys and CPAs must have gotten together and designed this outrageously complicated procedure so that everyone would have to hire them to do it.
Level 1

Self-Employed Health Insurance Deduction vs. form 1095-A entries

Thank you very much for dedicating so much time to answer the questions and, of course, congratulations on figuring it out, all on your own!
Level 1

Self-Employed Health Insurance Deduction vs. form 1095-A entries

Doc2465, Glad to hear that you figured it on your own... I only talk to TT experts when the bugs are working against me. Since Obamacare started my taxes have been calculated wrong by TT. Fortunately to my advantage, like taking too much deduction on line 29. Each year, it said "Great job!" after running the REVIEW section. My question is if Uncle Sam ever says you owe me more money what will happen when I say "I use TT and TT said my taxes were correct"?
Level 1

Self-Employed Health Insurance Deduction vs. form 1095-A entries

Thanks for the kind words rimma-sophia. guercini, you had better believe that I REALLY thought about just submitting the return because it did pass the review and told me "Great job!" too. My guess is that if they receive a return that has passed the error check by TT, they don't look too closely at the complicated issues. I didn't do it though because it was trying to give me such a huge deduction on Line 29 that I am not entitled to and even though that is in my favor and would save me thousands of dollars if they don't catch it, I just couldn't submit a return with a mistake that huge on it. I would think that if people have submitted returns with errors, after TT said no errors, and if the IRS has caught the errors, that TT would be forced to admit that their calculation is wrong and they would fix the problem but I'm not certain of that (see below). I believe that most people buy TT because they don't know that much about complicated tax situations like mine and they rely on TT to tell them what is right. If I was one of those people, I wouldn't have closely reviewed every entry on the forms and worksheets and would have just assumed it was accurate and, without realizing it was wrong, saved thousands of dollars.

Your last question is an excellent one. What WOULD happen if the error was caught after you submitted it when TT said it was correct? I can think of two possibilities, both of which would require you to send in the money owed, which is no harm done because you do technically owe it even if TT says that you don't. The first possibility is that the IRS just sends you a letter telling you how much you owe, you pay it, and that's the end of it and TT just continues making the error with their head in the sand. The second possibility is that TT will have to be confronted with the error because based on their guarantee of 100% accurate calculations, they will owe you (or the IRS) penalties and interest that accrued due to their mistake. Of course, if it goes the second way, that raises another question. When TT is forced to realize that they made a mistake, will they fix it or are they even able to fix it? With an issue this rare, I believe it is possible that even if "someone" at Intuit realizes that there is a mistake, they may decide that it is so rare that it would be cheaper for them to pay the interest for a few people each year than it would be to pay an entire team to do a major overhaul on the software. I am not a software guy but I assume it would be a massive project because of all of the iterations that are affected by so many different combinations things that even the "experts" don't deal with that often. The "experts" that I spoke with at TT about this topic all had many years of experience but every single one of them had to spend hours studying the IRS publications to brush up on the complicated stuff, just like I did. In the end, I tend to think that the mistake has never been caught by the IRS or on the rare occasion that it is, TT had no further involvement b/c I could see the IRS just waiving the penalties and interest due to the fact that it wasn't the taxpayer's fault. This would explain why the problems in this area persist year after year. As a side note that may interest you if you have read this much of my rambling, back in 2015 and 2016 when the PTCs first started, if you did not take any advanced PTCs and tried to fill in 0's for column C, TT would not allow you to go forward. You would get a pop up box that tells you that you must enter "an amount" in those boxes. Many taxpayers posted about this glitch and were finally told by TT to just put a penny (.01) in column C even though the 1095A had zeros for that column. Every single person who bought from the marketplace but did not take advanced credits had that problem and were forced to wrongly enter a penny for column C. I'll admit that entering a penny instead of zero is a pretty good "workaround" but just think about how many hours people anguished over this before finding this workaround and it wasn't fixed for the folowing year even though they definitely knew about it. At the very least, they should have put a popup on that page that said, "if your column C on the 1095A says 0.00, enter .01". IMO, they would never do that even though it would save hours of anguish because that would mean that they would have it in writing that they are instructing you to enter the wrong amount and that would be very bad publicity for them.

In sum, I agree with posters on other threads who have said that we buy TT hoping that it will make things easier for us and for most people, I'm sure that it does help a lot. Unfortunately, for those of us who have rare situations that take us to glitchy buggy areas, who are not willing to submit an inaccurate return, even if it is our favor and TT says it's accurate, it's a nightmare. I have seen other posts that say that we are all beta testers for their software, and you can see by the myriad upgrades and patches that frequently come out during the tax season that they have a very good point. If any TT people are reading this, I suggest that you make better use of beta testing your rare situation customers by changing your policy of having to start all over with a new "expert" on each call even though the previous "expert" has already spent several hours researching the issue. The new "expert" has to spend several redundant hours reviewing the notes from the prior "expert" and has to research the 98 pages of IRS documents all over again (Pub 974 and instructions for 8962). If there was a way that we could stay with the same "expert" until TT is forced to admit that there is an error in the software, then they could do a better job of catching glitches for rare situations. If they never admit that there IS a glitch, the can will just be kicked down the road time after time.
Level 1

Self-Employed Health Insurance Deduction vs. form 1095-A entries

Doc2465, OK, you convinced me. I will enter the correct deduction manually and pay the proper taxes this year. I think it is the right thing to do. It is going to be hard though, because of paying back the premium tax credits in excess of $18,000 (for the cheapest bronze plan with over $10,000 deductible) after paying only $32.52 for whole year (yes $32.52). I always looked at this as an unfair additional tax on people like me (and you). I know that 2 out of 3 tax payers keep the credits and end up paying almost nothing for Obamacare. I am one of three that subsidizes those two.  There has to be a better way...
Level 1

Self-Employed Health Insurance Deduction vs. form 1095-A entries

I feel you pain guercini big time. Let me take a stab at helping you figure out how you might legally be able to keep those credits. How high is your AGI above the 400% threshold? How many in your household? I assume that you are self-employed and that your PTCs are tied to that business? Being self employed, do you have a SEP IRA? Have you maxed it out? Do you and/or spouse have a HSA? Are you eligible for one? Did you and your wife contribute the maximum to a Traditional IRA? All of these are top line deductions if you haven't done these things, you may very likely be able to so that you can hold on to those credits!
Level 1

Self-Employed Health Insurance Deduction vs. form 1095-A entries

Thanks for being so kind and trying to help. Believe me I think I have done everything that is legally available: I contribute to HSA maximum amount. I contribute the maximum to the 401k under my business name. I use all expenses allowed for the business. I contribute the maximum to a Traditional IRA for my wife. I used Tuition deduction instead of education credits in the past (not this year thanks to new tax law). These are all the adjustment  to AGI I am aware of. I even made a mistake trying to be aggressive in reducing the AGI: I bought bunch of Municipal Bonds (instead of buying CDs) to reduce taxable interest income. Later I found out that IRS looks at the MAGI (Modified Adjusted Gross Income) not AGI for determining the Obamacare cliff. Every year something unexpected happens and I end up over the cliff by about few thousand. This year elimination of the Tuition deduction and MAGI mistake were the reasons for not qualifying.
Level 1

Self-Employed Health Insurance Deduction vs. form 1095-A entries

You are quite welcome. I can feel that pain in the pit of your stomach as you near the realization that you are going to have to send back $18k, especially if you are very close to not falling off that cliff. I'm pretty sure that I have mentioned that I do not have any expert tax credentials but I have done a ton of research on my situation with PTCs. The more your situation deviates from mine, the more I will have to plead ignorance. For example I contribute to a SEP IRA, not a 401k. I can contribute 25% of my net profit into the SEP, which is a pretty good chunk but I do not know if you would have a bigger or smaller deduction with a 401k. While it might be worth looking into for the future, I'm going to GUESS that it's too late for you to do that now unless you are allowed to contribute to both. IF eligible, you can still contribute to a SEP for 2018 until the tax deadline on April 15 2019. I do have a few more comments just to make sure that you have tried everything. I assume that you know this but I'm gong to ask you anyway: Do you know how to calculate your PTCs without using TT? What I say now will assume that you don't, or haven't. First, given all of the glitches, I would not assume that the TT calculation is correct and then learn to do it yourself. This is important because Health Insurance Premium Deductions affect your MAGI directly, which affects your PTC and your PTC affects those other two things so even if your MAGI is over the threshold, that doesn't mean that it still will be at the end of the extremely complicated calculations. Example: If your household includes you and your wife, the 400% above the poverty level is $65,840. If your MAGI is 1.00 below that you get PTCs, if it is 1.00 above, it's off the cliff for you as I'm sure you know. Here's the thing though. Suppose your total health insurance premiums are about $22,000. Now suppose your MAGI is $67,840 before you enter your 1095A. Even though your MAGI is over the 400% cliff mark now, it should not be after you do the calculation because whatever amount of the premiums is not subsidized, you can deduct on Schedule 1, Line 29. Let's suppose that you end up with $18,000 in PTCs. That would leave you with a $4,000 deduction on Line 29, which would bring your MAGI Down from $67,840 to $63,840, which is clearly away from the cliffs edge. Let me ask you this. When you go into form mode and look at Schedule 1, Line 29, what do you see after entering your 1095A? What ARE your total premiums? If you get PTCs, the amount of the PTC plus the amount left over that comes out of your pocket (Sch 1, Line 29) should equal the total amount of premiums for the year. And finally, did you make sure that you checked the box that says that you had a market place plan and it is connected to self-employed business when you entered your 1095A?
Level 1

Self-Employed Health Insurance Deduction vs. form 1095-A entries

Doc2465, Wow! You are really on top of this stuff. I thought I have done all it can be done (in my situation). You may have brought up some points that I didn't think about. I always let TT do its dance unless something looks really weird because I don't feel like I should do manual calculation if I am using a tax software, but I may have to. Is there any good instructions on how to calculate PTCs? Meantime, here is some additional info about my situation. I have a dependent, so the cliff for me is a little over $80,000. The sum of lines 27, 28 and 29 equals line 12 ($52,000+). Line 29 is the balancing item ($14,000+). It is less than the Column A total on 1095A, $18,060 (Column B total is $28,596 and Column C total is $18,022) because I let TT maximize the line 28.  I need to do some research about contribution limits difference between SEP and 401K. I think for smaller incomes 401K works better due to $24500 fixed contribution (plus I think 20% of profits with some limit). Yes, I checked the box saying insurance tied to the business.
Level 1

Self-Employed Health Insurance Deduction vs. form 1095-A entries

It's like I'm going through this with you because I have worried all throughout 2018 that I might end up making just a little too much and cost myself about 20 grand by getting greedy. Of course we want to squeeze out all of the income that we can without going over the cliff. It ended up pretty much exactly perfect for me. I was shooting for about a $3000 cushion and that's pretty much exactly what I got. Of course now I wish I had just worked about $2000 or so more but I'll take it, especially for my first year of going for the subsidies. I intentionally cut my income in 2018 by about $24k to qualify for about $21k in subsidies. That's a lot of time off for me for only a $3k sacrifice. Up until I took a long look at my tax results in 2017 and saw how close I was, I had just always assumed that I made way too much to ever qualify for subsidies but I'm tired of paying for everyone else to have far better insurance than I can afford. If there are a lot of people like me getting tired of paying it all for everyone else and just decide to cut production so that they can finally get subsidized, Obamacare won't last very long.

Ok. Line 27 and 28 are what they are and can't be changed so let's forget about those two lines for now. It's line 29 that matters here because it is the balance between how much of your premiums are subsidized and how much you have left over to deduct on line 29 that counts. What I need to know is: 1. Is TT saying that you get subsidies, or is it saying that you don't qualify? 2. What is your line 29 exactly? If TT is saying that you do not qualify for PTCs, line 29 should be equal to the total of Column A. If it is saying that you do qualify, it should be approximately equal to Column A minus the PTCs that it says that you are entitled to. 3. What is your MAGI (according to Yahoo)?

My 8962 was not as difficult to figure out because my MAGI was below the cliff even before anything on line 29. There is a tool at this site that looks like it might be helpful. Scroll down to the "Start" button. But first, send me that info and I will see what I can make of it. I sent you my email address on the last post in case you didn't want to have this discussion in front of everyone but they must have deleted it.

Level 1

Self-Employed Health Insurance Deduction vs. form 1095-A entries

Oops, I forgot to ask that if TT is saying that you do qualify for PTC, what is it exactly? That info will be on Schedule 5, Line 70. Either way, check out that line if you have a Schedule 5. It will probably be tomorrow morning some time before I will see your reply.
Level 1

Self-Employed Health Insurance Deduction vs. form 1095-A entries

Doc2465, here are the answers:
1. Line 70 on Schedule 5 is BLANK. I remember TT saying "It looks like you have to pay back some of the credit" and showing the full PTC $18,022 during interview process.
2. Line 29 is $14,189 and Line 12 is $52,038.
3. I don't know where is MAGI, but it must be the sum of my AGI $79,849 and Tax Exempt Interest $5,351 which is $85,200. It is over the cliff by $3,520. It is ironic! Last tax year (2017) I had $4,000 tuition deduction. If they didn't eliminated that deduction I would have been under the cliff by $480 this year   and save $18,022. Thank you Uncle Sam. It is sad.
Is it possible to have partial PTC pay back depending on some relationship between line 29 and PTCs? I always thought I have to pay back the whole thing or nothing depending on if I am over the cliff or not (even by $1). Am I wrong? By the way, your premium is $25,000. Is it because you have a better plan like a Silver one? Thank you so much.
Level 1

Self-Employed Health Insurance Deduction vs. form 1095-A entries

I just tried to post a long reply but it was lost. I wonder if we are at the limit for one topic? I tried to put in my email so maybe they won't allow that?