Where to report COBRA premium assistance subsidy per the American Rescue Plan Act of 2021?

[kptx08]

We received the COBRA premium assistance subsidy per the American Rescue Plan Act of 2021. Where to report the amount of the subsidy received in TurboTax Deluxe? We didn't receive any unemployment payments.

[MinhT1]

The COBRA premium assistance subsidy under ARPA is not taxable to the beneficiary and does not need to be reported on your tax return.

[kptx08]

Thanks for clarifying that!

[kptx08]

I'm now working on the state tax portion for the 2021 tax filing. This is what TurboTax shows:

Enter COBRA premium assistance subsidies excluded from federal income.

The American Rescue Plan Act of 2021 (ARPA), enacted on March 11, 2021, allows an exclusion from gross income for COBRA premium assistance subsidies received by eligible individuals for the COBRA coverage period beginning on April 1, 2021 and ending on September 30, 2021. California law does not conform to this federal provision.

Only enter amounts you excluded from your federal return.

COBRA Premium Assistance Excluded from federal income:___________

So, it looks like I do need to report the COBRA premium assistance subsidies. I did receive this subsidy for the six months of April to September 2021.

Under Wages & Income on TurboTax for Federal Taxes, I wasn't "excluding" it from income on federal return; I just don't see where to report it. I understand that the subsidy isn't taxable on federal tax return. But, it looks like perhaps it's taxable on California return?

How to handle this?

[MaryK4 · Accepted solution]

The premium subsidy is not included in income for federal tax purposes. However, its treatment for state income tax purposes is determined under state law and depends on the tax law of the particular state.   California does not conform to new IRC section 139I which excludes COBRA premium subsidies from gross income.  You will have to add the amount of COBRA premiums paid on your behalf in the California income tax section of TurboTax.  @kptx08

[kptx08]

Thanks for your reply. I did find it under the California state section.

[Lukett21]

I had already paid my COBRA insurance for several months that were covered under the ARP. The IRS apparently paid the reimbursement to my old company and the company sent me a check for the reimbursement. BUT, they also sent me a 1099-NEC for the reimbursement amount. When I enter the 1099 NEC in turbo tax it seems to think I have a business and is treating it as income. Any suggestions? Thanks so much!!

[JulieS]

They should not have sent you a 1099-NEC for this payment, but they are not likely to change this in time for you to file. 

First, you will need to get rid of the forms that are treating this as a business.

If you are using TurboTax Online:

1. From inside the return, scroll down to Tax Tools on the bottom of the left side menu.
2. Select Tools.
3. Click on Delete a form (third on the list at the bottom of the screen).
4. Find Form 1099-NEC on the list of forms.
5. Click Delete to the right.
6. Confirm your Delete.
7. Find Schedule C on the list of forms.
8. Click Delete to the right.
9. Confirm your Delete.
10. Click Continue in the lower right. 

Click Continue with my return.

1. If you are using the Desktop version (disc or download):
2. Click Forms toward the upper right corner. 
3. Find Form 1099-NEC on the list on the left.
4. Highlight it, then click Delete in the lower left corner of the reading pane.
5. Find Schedule C on the list on the left.
6. Highlight it, then click Delete in the lower left corner of the reading pane.
7. Click on Step by Step in the upper right corner to return to the interview.

Now enter it this way:

1. Select Federal on the left side menu.
2. Select Income and Expenses toward upper left.
3. Expand/ scroll down the list and find the section called, Less Common Income.
4. Scroll all the way down and select Miscellaneous Income, 1099-A, 1099-C.
5. Select Other reportable income.
6. Answer the first question Yes.
7. Enter COBRA refund as the description and amount on this page, click Continue. 
8. Click Add another income item.
9. Enter COBRA refund not taxable as the description and the same amount as a negative number on this page, click Continue.

[Lukett21]

Thank you so much for your time and expertise in answering my question! I wish I could buy you lunch!

Thanks again!

[Mcruseturner]

Where do I find the amount to enter for the COBRA premium subsidy, where it asks to "enter amounts you excluded from your federal return. COBRA Premium Assistance Excluded from federal income" for my California state return? Should I have received a form with this information?

[RobertB4444]

You should contact your insurance provider for that information.  They have it available.