1095A Self employed health insurance

[dbilodeau-sbcpa]

Should line 29 self-employed health insurance deduction from 1095A linked to k-1 partnership be the amount of the excess advance premium tax credit plus the amount paid?  Only some of the amount is flowing to line 29 with the difference going to Schedule A medical expenses.

[TaxGuyBill · Accepted solution]

Hypothetically, yes.

However, that uses an Iterative circular calculation (Line 29 affects the amount of the Premium Tax Credit, which in turn changes the amount on Line 29, which changes the Premium Tax Credit, which ...).

Sometimes, that calculation doesn't work out nicely with a definite answer.  The IRS then suggests an Alternative Calculation, which ends up with some dollar amount missing.  The IRS doesn't say what to do with that missing amount, so ProSeries throws it onto Schedule A.

If it was before April 15th, the best option to ask the taxpayer to make a contribution to a Traditional IRA to lower MAGI, and to get the calculation to work out nicely.

The next best option is to manually figure it out (which is gruesome), unlink the K-1, and keep fiddling with the numbers for the Self Employed Health Insurance to get a reasonable result from your manual calculations.

The next option is print out the 8962, override Line 29 to include that missing amount (the amount the ProSeries threw on Schedule A), and override the 8962 to match the original.  However, I'm not sure if overriding the 8962 is possible, so that may not even be an option.

The worst option is to leave it as ProSeries does it.

https://www.irs.gov/pub/irs-pdf/p974.pdf#page=56

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