Self-employed health insurance and excess advanced premium tax credit repayment

Forum|Forum|6 years ago
February 1, 2020
5 replies
55 views

Self-employed client had higher than expected income, which resulted in excess advanced premium tax credit repayment of $24,000. Client can take the $24K as a self-employed medical insurance deduction, but on my program, then that seems to lower the aptc repayment. Like a circular equation. . .?

ProSeries Basic

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Accountant-Man

Level 13

It IS a circular calculation.

** I am "Elevating with Intention!"

T

TaxGuyBill

@NPChristy wrote:

Self-employed client had higher than expected income, which resulted in excess advanced premium tax credit repayment of $24,000.

How much higher was his income?

If he can contribute to retirement accounts (such as IRAs and SEPs) to lower their income below 400% of the Federal Poverty Level, you can limit the repayment to $2650 (or less), which would save your client roughly $20,000 on their tax return.

N

NPChristyAuthor

Level 4

Yes, that would've been my 1st solution, but the client brought in his 2018 taxes, so he's behind a year.

T

TaxGuyBill

Bummer.

Next questions are (1) Is he married and (2) if so, does the 1095-A also cover someone else in his family? If so, check out if filing as Married Filing Separately would help. The 1095-A would be split, and if one of the spouse's incomes is under 400% of the Federal Poverty Level, that portion of the repayment would be limited.

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