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Officer health insurance is correctly in box 1 on W-2, officer also receives a 1095-A with no Premium Tax Credit. Pro Series is not allowing full amount on 1040 line 29?

Forum|Forum|6 years ago
December 6, 2019
16 replies
93 views

Why is Pro Series not allowing an S Corp shareholder health insurance correctly on W-2 to flow to 1040 line 29 when shareholder also receives a form 1095-A (with no premium tax Credit?

ProSeries Professional

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Best answer by TaxMonkey

This is governed by Revenue procedure 2014-41, and leads to an unfavorable taxpayer conclusion, where essentially the PTC which they do not end up being allowed to claim reduces their SEHI adjustment.

https://www.irs.gov/pub/irs-drop/rp-14-41.pdf

sjrcpa

Level 15

How much income or loss (compared to the W-2) was shown on the S Corp K-1? EDIT-Ignore this.

The more I know the more I don’t know.

PhoebeRoberts

Intuit Community Champion

Doesn't matter. FICA wages are the SE income for S-corp shareholders.

T

TaxGuyBill

@sjrcpa You beat me to it.

@PhoebeRoberts ??? SEHI will be limited to Box 5, minus Line 28 on Form 1040.

@jbb What is Box 5 of the W-2? Any retirement contributions on Line 28 of Form 1040? Double check no Premium Tax Credit - check Line 24 of Form 8962.

PhoebeRoberts

Intuit Community Champion

Right; K-1 income (or loss) isn't relevant for S-corp SE health.

T

TaxGuyBill

Ah, I misread Susan's comment, I just saw "W-2".

J

jbbAuthor

Level 2

So the plot thickens, what the program is doing is deducting the PTC from the SEHI, and putting the difference on line 29, however, it is not giving them the PTC on line 69 because after it reduces the SEHI for the PTC the AGI is over 401%. IF the full amount of SEHI goes to line 29 then AGI is below 401% and the program gives them $9,373 of refundable PTC. So which is right? They are right on the edge and it makes a huge difference in refund.

rbynaker

Level 13

Any chance you can do a deductible IRA contribution? SEP-IRA? HSA?

This is the point where I start doing the math by hand and stop the software from trying to calculate this for me. Spend some time with the Rev Proc that TaxMonkey mentions below.

T

TaxGuyBill

ProSeries has a 'glitch' in this scenario.

The proper calculation goes back-and-forth until it gets an answer (or it gives up). When the calculation goes past 400% of the Federal Poverty Level, ProSeries stops the calculation and denies the credit, even though calculation should keep going back and forth until there is an answer..

As was mentioned, manually calculating it (which can be gruesome) would give a true answer, but contributing to a deductible IRA or HSA would probably solve the problem as well.

J

jbbAuthor

Level 2

Holy Crap, if I enter a $10,000 IRA ($5,000 each) they qualify for about $10,000 in refundable PTC, that is huge.........and without that entry, Pro-series is just wrong with its computation of both deductible health insurance and the Premium Tax Credit........because they are right on the edge of the 401%, are they going to fix this? Everybody be careful with this, it's a bigger deal than you may think when you are close to the 401%. In my case it was just obvious that the amount of deductible health insurance was wrong.

rbynaker

Level 13

I agree, makes a HUGE difference if you can get under 400% FPL. Since I haven't said it in a while, these tax cliffs are a really bad idea, and this was a horribly written piece of legislation.

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