No, the health care continuation coverage is referring to health care whose premiums you have to pay out of pocket with after tax dollars. No employer-subsidized health care premiums will qualify for this.
The law specifically refers to "a health plan during any period of continuation coverage required under any Federal law" - which includes COBRA - " A federal law that may allow you to temporarily keep health coverage after your employment ends, you lose coverage as a dependent of the covered employee, or another qualifying event. If you elect COBRA (Consolidated Omnibus Budget Reconciliation Act) coverage, you pay 100% of the premiums, including the share the employer used to pay, plus a small administrative fee."
To my knowledge (but I am a tax professional, not a labor professional), there is no federal law that covers the insurance needs of people who voluntarily retire early.
P.S., another reason to be able to pay for health insurance premiums from your HSA would be when you are paying for "a health plan during a period in which the individual is receiving unemployment compensation under any Federal or State law"...however, I assume that a retired state employee would not qualify for unemployment - but, then again, I am not an unemployment expert, either.
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There is a link to the HSA interview under Less Common Income on the Wages & Income menu (or Personal Income for Home & Business). There is also a number to the left of the Start or Update button on this line.
This numbers is the total of all the distributions made from your HSA(s). This number is normally NOT taxable, but I understand your confusion.
You can see if this number is taxable by looking at page 1 of your 1040. If you have the online product, you can look at Tax Tools on the left, then click on Tools, then click on View Tax Summary in the box that appears, then, back on the left, click on Preview My 1040. If anything from the HSA was taxable, it would appear on Line 21 with the description "Health Savings Accounts" or something like that.
If you have the desktop software, you can go into Forms mode and look at the 1040 as well.
The distributions can be taxable if you took them out of the HSA for reasons other than to pay for qualified medical expenses. And, of course, if you made an excess contribution which you withdrew before the due date, this would show up on Line 21 also (I don't know if it would appear on the Wages & Income menu).
Contributions to the HSA are not normally taxable - EXCEPT in TurboTax they appear to be taxable until you answer the question in the HSA interview that you have HDHP coverage, at which point, they are subtracted from income again (if the contributions were on your W-2).
Hopefully, you will look at line 21 and not see any HSA stuff there, and you can declare victory.
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I am sorry for your situation.
Extensions are normally extensions of time to file, not extensions of time to pay. If you owe tax, you still have to pay the tax due on April 17th (this year) - the 6 month extension gives you up to 6 months to send your paperwork in.
I don't know what state you are in, but my guess is that it is unlikely that they will refund your payment. However, the only way you can find out is to call the correct number at the state's DOR and ask. Do a search for "[your state] department of revenue "What if I can't pay my tax?" " (yes, include the inner but not the outer double quotes)
If you do this for the IRS, you will get this URL to an IRS webpage. But, of course, you will have to search for your particular state.
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Because TurboTax is importing data files from outside of TurboTax, it can happen that something goes wrong in the auto-import of a form like a W-2.
If something looks wrong to you, print off or copy your W-2, delete it, and then re-enter it manually to avoid auto-import problems.
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May I assume that your parents received a 1095-A from Covered California, and that your name is on this form?
If so, you have to file form 8962 to reconcile the amount of premium tax credit that you should have received with what you actually received on this marketplace (Obamacare) policy. You need to get a copy of your parents' 1095-A since I don't believe that Covered California would have sent you one (if your parents told CC that they would be taking you as a dependent).
However, as a dependent, your parents normally would have taken care of the entire reconciliation, and your allocation percentage on form 8962 should have been zero.
See this discussion (especially in the comments) by TaxGuyBill in which he discusses how you do this and the situations in which sometimes the child should take the allocation instead of the parents.
There are two ways to owe money here: (1) you have to pay the individual responsibility payment for not having health insurance (this shouldn't be the case - you did tell TurboTax that you had insurance all year, didn't you?), and (2) you end up owing the IRS for premium tax credit because you were advanced too much credit during the year - this is more likely the case.
Note that you have to coordinate your 1095-A filing with your parents'. That is, if you take 0% of the 1095-A allocation, then your parents have to take 100%, or the IRS will notice.
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You apparently had health insurance through the Affordable Care Act (Obamacare) in 2017. If you did, then the IRS needs to reconcile the amount of Premium Tax Credit (PTC) that you received with what you should have received.
The reason there is a reconciliation is because the amount of PTC that you receive (actually, it's paid directly to the insurance company to reduce your health insurance premiums) is based on your estimate of your earnings for 2017 that you made at the beginning of the year, but by the end of the year, your actual earnings may lead to a different amount of PTC - and you would either owe or get additional PTC as a result.
You should have received a 1095-A form in the mail earlier this year from the marketplace (federal or state) through which you bought the insurance. Call them or go online at the marketplace to get your 1095-A if you don't have it already.
When you get it, in TurboTax, go to the Health Insurance link (at the top of the screen, to the right of Deductions & Credits), click on this, and then go through the interview, answering that you bought insurance through a marketplace (Obamacare). When you do, you will have the chance to enter the information from the 1095-A.
I imagine that TurboTax will generate a 1040 or 1040A at the same time that it generates the 8962.
If you did NOT have Obamacare but regular insurance, write a nice reply back to the IRS stating that you did not have coverage under the Affordable Care Act but under XYZ company, and enclose a copy of your 1095-B or 1095-C.
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The ability to take the home office deduction on Schedule C is not based on the net profit on Schedule C but can be considerably more arcane.
As the IRS says, "If the business deductions that are unrelated to the use of your home are greater than the gross income derived from the qualified business use of your home, then you cannot take a deduction for this qualified business use of your home." This means that even though the net profit as shown on Schedule C shows a positive number, form 8829 and its worksheet may show a negative number.
Since you are doing actual expenses, first look at line 8 in Part II of the 8829. Is it negative? That will be your first clue.
If you have the desktop software, the following will work...
Click on the number in the box on line 8. A magnifying glass should appear at the left edge of the box. Click on the magnifying glass, and TurboTax will open the "Form 8829 Worksheet". Look at line 9 in Part II on the worksheet - this should be where your line 8 on the 8829 came from. Then look at Part II and see if you can start to make sense of a negative income number for your home deduction.
If you have the Online software, then the form 8829 and the 8829 worksheet can be seen once you pay for the product. Go to the end (File) and take a look at the Print Center or the PDF before you actually file.
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Delaware and New Jersey are not reciprocal states, i.e., there is no special treatment to make it easier to do your taxes with both.
So, if you haven't filed yet, I would do Delaware fist as a non-resident, then I would do New Jersey as a full-year resident. Residency is a function of the facts on the ground, not what state happened to get your withheld taxes. Besides, it happens all the time that you live in one state but have to report income in another.
If you are asked, allocate all earnings to New Jersey. Besides, the New Jersey return will probably be aware of your Delaware wages - many states take the entire annual income and allocate it on residency time or whatever...
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Apparently, your HSA administrator accepted your withdrawal of excess contribution as an actual “return of excess contributions” made by the deadline (perhaps they thought that you had extended your 2016 return). This is shown by the 1099-SA received in early 2017 with the distribution code of ‘2’.
If so, then you should have told TurboTax on your 2016 return that you would withdraw the entire excess by the due date of the return. If you did, then there was no 6% penalty, because that penalty is assessed only on the carryover of excess contributions to a new year, not when the excess is withdrawn. So did you tell TurboTax that you would withdraw the excess or not? You must have told your HSA administrator that you wanted to withdraw an excess contribution or else you would not have received a 1099-SA with a code of ‘2’.
And on your 2017 tax return, when TurboTax asks you if you “overfunded” your HSA in 2016, you should answer “no”, because withdrawing the excess in a timely manner (as the HSA administrator apparently recognizes) cuts off the ‘overfunding’. The question should actually be “Did you carryover any excess from 2016 to 2017?”
Well, your situation still isn’t 100% clear to me, but if you
(1) told the HSA administrator that the $135 was a contribution instead of a mistaken distribution,
(2) filed your 2016 return showing an excess of $135,
(3) did not tell TurboTax that you were withdrawing this amount by the due date and were assessed the 6% penalty, and
(4) told the HSA administrator that you wanted to withdraw the excess and they actually let you even after the original due date of the return,
Then just enter the 1099-SA with the code of ‘2’ to your 2017 tax return and be done with it. Oh, and like I said, answer “No” when you are asked on the 2017 tax return if you ‘overfunded’ your HSA in 2016.
You will have paid $8 more than you should have to my mind, but it’s a cheap lesson to learn that when you get in these situations, to ask a tax professional (not your HSA administrator) about what you should do now, not a year later.
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