How do health care reform and taxes connect? The Affordable Care Act is single largest change to the tax code in two decades. Find help navigating the complexities of the new health care legislation, Medicare, Medicaid and other medical deductions.
01-22-2018 03:02 PM
My wife and I received insurance in 2016 through the Affordable Care Act. Based on our income estimation, we received a subsidy on our premiums. Our 2016 income, however, ended up being roughly $150 over the subsidy threshold. Consequently, we had to pay more than $7,000 to the IRS. Can we deduct that amount as medical expenses against our 2017 income?
01-22-2018 09:40 PM
Welcome to the H&R Block community.
Yes! You can deduct the amount you re-paid on Schedule A in the medical expenses section as a health insurance premium.
When you have to repay a premium tax credit it is the same as if you paid the insurance premium yourself so long as the PTC had been paid to your insurance company to cover your premium.
Note that in order to deduct this on your 2017 tax return you must have repaid the PTC in question during 2017. I am assuming you did so when you filed your 2016 tax return last year.
If you have any other questions I'll be glad to help.
Senior Tax Advisor (Tampa, FL)
03-09-2018 06:22 PM
You can also take an itemized deduction for any premiums you actually paid in 2017 as a medical expense deduction. Unfortunately, only the amount of medical expenses that are over 7.5% of your AGI are actually used as a deduction.
If you are self-employed, it's possible to take an income adjustment on Page 1 of your tax return as self-employed health insurance expenses. This is a bit tricky with a marketplace plan due to the circular calculations that are involved, but it can be doable.