Health Care

Health Care

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.

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Trusted Pioneer
Posts: 5
Registered: ‎03-05-2016
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multiple copies of 8962 and self employment health ins deduction not computing correctly

Software is not allowing me to take deduction for premiums paid for health insurance.  Yes I am getting a premium tax credit but program is not calculating the deduction based on premiums that were paid.  If I add back the premium tax credit that I got in 2017, as well as the premiums I paid, it computes correctly.   A work around but not a great solution. I am not taking a deduction for medical expenses on Schedule A.    Also, I have multiple copies of Form 8962 which I can not delete.  The whole point of filing with this software is so I can e-file which is doubtful given the multitude of bugs I have found.  

Council Member
Posts: 516
Registered: ‎04-06-2016

Re: multiple copies of 8962 and self employment health ins deduction not computing correctly

The Self Employed Health Insurance (SEHI) adjustment and the premium tax credits if you have ACA are both dependent on each other (think which came first the chicken or the egg), so the calculation is an iterative process. 

 

When the software asks you how much you paid for SEHI you should enter the amount you actually paid-- not including the amount of premium tax credits were paid on your behalf to the health insurance company. The software will calculate the subsidies you're eligible for and then adjust (either increase if you have to pay some of the subsidies back, or decrease if you're eligible for more subsidies) your SEHI adjustment based on the results.  This will change your AGI, so it will have to go back and recalculate your subsidies, which will change the amount of your SEHI adjustment, which will change your AGI... It will continue this until the change in subsidy from one calculation to the subsequent one is below its limit. 

 

When it finishes, the amount on Line 29 should be the amount of your premiums that will end up not being paid by subsidies after taking into consideration any APTC (advance premium tax credit) you have already received and any subsidies you either have to pay back or receive when you file your return and reconcile the subsidies on Form 8962.

 

For example:  Assume your total insurance premium for the year was $10,000, and you received $8,000 in subsidies throughout the year.  You'd report the $2,000 you actually had to pay as the initial SEHI adjustment.  Assume this makes your AGI, $x.  The program will take this information and calculate the subsidy you are eligible for based on this actual income (since the APTC was based on your estimated income).  

In case 1, you made less than you originally estimated. The program would calculate that your subsidy should have been higher, say $9,500.  This will change the amount to be reported on Line 29 to $10000 (total cost) -$9500 (subsidy) = $500 (your cost).  This will increase your AGI since you're now only taking $500 instead of $2000 for the adjustment. The program will recalculate your subsidy and would get something lower (since now your AGI is higher and AGI and subsidies are inversely related).  Let's say that based on the new info, your subsidy should have been $9300. It'll go back and subtract that amount from your total cost and put $700 ($10000-9300) on Line 29.  Which will reduce your latest AGI by $200 (since you're getting $200 less in subsidies and will have to pay that out-of-pocket (oop)). It'll go back and recalculate your subsidy again, etc., until when it recalculates your subsidy the difference in the latest amount it calculates is within the allowed tolerance. Your resulting subsidy will be somewhere between the $9500 and the $9300Your final SEHI adjustment would be $10000 - the final premium subsidy number.

 

In case 2, you made more than you originally estimated, The program will calculate that your subsidy should have been lower, say $4000.  This will change the amount to be reported on Line 29 to $10000 (total cost) -$4000 (subsidy) = $6000 (your cost).  This will decrease your AGI since you're now only taking $6000 instead of $2000 for the adjustment. The program will recalculate your subsidy and would get something higher than the $6000 (since now your AGI is higher and AGI and subsidies are inversely related).  Let's say that based on the new info, your subsidy should have been $5500. It'll go back and subtract that amount from your total cost and put $4500 ($10000-5500) on Line 29.  Which will reduce your latest AGI by $1500 since you're getting that much more in subsidies than the previous calculation. It'll go back and recalculate your subsidy again, etc., until when it recalculates your subsidy the difference in the latest amount it calculates is within the allowed tolerance. This number will likely be somewhere between the $4000 and the $5500. Your final SEHI adjustment would be $10000 - the final premium subsidy number.

 

There are some cases that confuse the program and may require you do some finagling or number overriding to get it to work.  One is when you're flip-flopping the 400% FPL line.  The software gets confused and ends up messing this all up. It ends up with part of the premium amount on Line 29, and some on Schedule A as an itemized deduction with no premium tax being given. I believe this happens because the subsidies never converge to within the allowed tolerance for the calculations.


Karen

 

 

Trusted Pioneer
Posts: 5
Registered: ‎03-05-2016

Re: multiple copies of 8962 and self employment health ins deduction not computing correctly

If I input the amount of premiums I actually paid  - $1884, it shows a deduction of $0 for self employed insurance deduction.  My advance premium tax credit was $1984.  Since I made less than anticipated, I am told I am getting an additional credit of $771.  So the actual premium I will have paid will be decreased to $1113. so why am I not getting that amount as a deduction?  And how do I get rid of the 5 copies of Form 8962?   ARRGGHHH!

Council Member
Posts: 516
Registered: ‎04-06-2016

Re: multiple copies of 8962 and self employment health ins deduction not computing correctly

It sounds like you're understanding this correctly.  It does seem like it should be entering the $1113 on line 29 and giving you a credit of $771.  The 5 copies of Form 8962 are probably supposed to be there. The program will create one for each of the iterations it does, so you shouldn't get rid of them.  The program will only send the one(s) necessary to the IRS.

One thing I can think of to check is to go back through the interview process and make sure you answered all of the questions and answered them correctly. In order to be able to take the SEHI adjustment you have to have at least as much in SE earnings as the deduction you're trying to claim. Also, be aware that if you could have chosen employer coverage at a job you had at the same time, your SEHI would not be able to be claimed as an adjustment.  

Karen

@mmm1958 wrote:

If I input the amount of premiums I actually paid  - $1884, it shows a deduction of $0 for self employed insurance deduction.  My advance premium tax credit was $1984.  Since I made less than anticipated, I am told I am getting an additional credit of $771.  So the actual premium I will have paid will be decreased to $1113. so why am I not getting that amount as a deduction?  And how do I get rid of the 5 copies of Form 8962?   ARRGGHHH!


 

Trusted Pioneer
Posts: 5
Registered: ‎03-05-2016

Re: multiple copies of 8962 and self employment health ins deduction not computing correctly

So I just reran my taxes using turbo tax & there were no problems getting my self employment health ins deduction & advance premium tax credit calculated correctly.  This resulted in a net increase in my total refunds of $297. There is a programming error with this software so looks like I'll be filing using Turbo Tax.  Now who do I see about that refund?  

Council Member
Posts: 516
Registered: ‎04-06-2016

Re: multiple copies of 8962 and self employment health ins deduction not computing correctly

Good question. I'm not an H&R Block employee so maybe one will chime in.

Karen

Trusted Pioneer
Posts: 5
Registered: ‎03-05-2016

Re: multiple copies of 8962 and self employment health ins deduction not computing correctly

So could find no way to get the above deduction with H & R software & since turbotax calculated correctly am going to use them.  I was able to get a full refund via a chat session.  Customer service rep was quick & efficient.