- Mark as New
- Bookmark
- Subscribe
- Permalink
- Report Inappropriate Content
Any idea why the self-employed health insurance deduction is reduced when the modified adjusted gross income reaches 401% of the federal poverty level?
- Mark as New
- Bookmark
- Subscribe
- Permalink
- Report Inappropriate Content
Did ProSeries cough up a hairball (and leave it lying on the Sch A Medical Wks)?
There are certain circular calculations involving PTC/SEHI that are unsolvable. If a deductible IRA is available I would try plugging some numbers into that to see if the software can find a solution. Unfortunately trial-and-error is the easiest approach, just keep plugging numbers into the IRA box and see what happens.
- Mark as New
- Bookmark
- Subscribe
- Permalink
- Report Inappropriate Content
Check changes in Form 8962. The changes in premium tax credit and repayment affect the TP's actual health insurance premium. If you link Form 8962 input to SE Health insurance (either Sch C, or K-1 Wages/SE income), the changes in PTC likely would change the SEHI adjustment.
I come here for kudos and IRonMaN's jokes.
- Mark as New
- Bookmark
- Subscribe
- Permalink
- Report Inappropriate Content
I used link it to sch C , BUT some part of the insurance prems flow to SCH A ,
- Mark as New
- Bookmark
- Subscribe
- Permalink
- Report Inappropriate Content
"I used link it to sch C"
Yes; the business income (disallowing for the SE tax) needs to be high enough to deduct the SE Health. Otherwise, the rest becomes Medical subject to the itemize limit. Link it to Sched C, and any other qualifying form, to get the better benefit.
Don't yell at us; we're volunteers
- Mark as New
- Bookmark
- Subscribe
- Permalink
- Report Inappropriate Content
the only income is the sch C income for the client , and which is over 401% for 8965, but portial of the prem paid floe to sch A, any idea how proseries calculate that ?
- Mark as New
- Bookmark
- Subscribe
- Permalink
- Report Inappropriate Content
You seem to be relating things that don't relate.
Sched C has the provision for SE Health as a deduction, which provides parity to those covered under an employer plan. This deduction cannot exceed the business reported taxable income; it can't be used to create a loss.
1040 has the provision for those who itemize to include their Medical care plan coverage (private, marketplace, medicare) to deduct the premiums that exceed the minimums, if they are itemizing and not taking the Standard Deduction. This is only the overflow from the amount a business person is reporting as "above the line" deduction (the previous paragraph) to avoid double-dipping.
Form 8695 was used to claim exemption for the ACA requirement, which is moot, now, because of the court ruling.
Don't yell at us; we're volunteers
- Mark as New
- Bookmark
- Subscribe
- Permalink
- Report Inappropriate Content
@WY2 wrote:
the only income is the sch C income for the client , and which is over 401% for 8965, but portial of the prem paid floe to sch A, any idea how proseries calculate that ?
I doubt the ProSeries developers even know how the software calculates that. If it's all Sch C income then there's still time for a SEP-IRA contribution for 2021. I assume you mean form 8962 not 8965. You really want to play around with this to see if you can get the income under 401%.
Jot down the balance due now (and the amount of the PTC). I would start with a $6K IRA and see how/if that changes the bottom line balance due/PTC. If that's not enough, remove the IRA and try a 20% SEP-IRA. This will tell you how much the client needs to put into an IRA and/or SEP-IRA in order to qualify for PTC. My guess is that this is achievable because the circular calculation was unsolvable. If your client had too much income then it would all be SEHI and nothing would end up on Sch A. Too little income and it would be subsidized by PTC and nothing would end up on Sch A. In between is where you end up with broken math problems.
Rick