Iowa Health Insurance Deduction

[Jayhawks 2023]

It appears like if you have a self-employed person that the health insurance is taken as an adjustment on the Federal Schedule 1, and they are over 65  and have income of less than $100K, you are getting the deduction again on Iowa.

Will there be a fix??

[taxiowa]

It also happens when you itemize your deductions.  Health insurance is already included in taxable income thru way of itemized deductions.  So to deduct it again is of course idiotic.  I have just been adjusting the amount on line 15 of schedule 1. 

Adjust to 0 if self employed deduction is used to already reduce taxable income.  I only deducted it to the excess of allowed medical deductions over the limit for those over 65 with enough to itemize.  Because that is the only tax benefit amount gained.

[Jayhawks 2023]

Thanks for the work around, maybe a little more money into product development and a little less in the Super Bowl advertising budget and we wouldn't have this.

[The_AntiTax_Man]

Lawmakers want to know how TurboTax used $94 million in tax breaks

Lawmakers want to know how TurboTax used $94 million in tax breaks

THE VERGE

Lawmakers want to know how Intuit spent $94 million in tax breaks

SEC filings show that Intuit received $94 million in federal research and experimentation credits in 2022, which grew to $106 million in 2023. The credit is supposed to support research that the company otherwise might not have been able to afford.

Senators Warren, Sanders, Blumenthal, and Representative Porter sent a letter to Intuit yesterday blasting the company for not answering questions they have about how Intuit used the tax credits. The four lawmakers initially sent a letter to Intuit on January 2nd, demanding to know how the money was spent and setting a January 16th deadline for Intuit’s response.

They didn’t get the answers they were looking for, and sent a follow-up letter yesterday asking for the same information by February 7th. “The American public deserves answers about how you are spending their hard-earned dollars,” says the letter, which Warren’s office shared exclusively with The Verge.

“With the money that the federal government used to subsidize Intuit’s research, the IRS could have offered free, online tax filing to millions of Americans.”

At the heart of the spat is new tax filing software the IRS finally launched as a pilot this year called Direct File, an alternative to Intuit’s embattled TurboTax that Warren has championed for years.

The lawmakers want to know how much Intuit has spent on research into software improvements, cybersecurity, advertising, and other areas between 2018 and 2023. But they make the argument that a free federal e-file program would be a better use of the funds.

“As the maker of TurboTax, Intuit has been one of the opponents of free and simple tax filing for Americans,” the January 2nd letter to Intuit CEO Sasan Goodarzi says. “With the money that the federal government used to subsidize Intuit’s research, the IRS could have offered free, online tax filing to millions of Americans.”

Intuit responded with its own letter on January 16th, which Warren’s office also shared with The Verge. It doesn’t directly respond to questions, instead saying, “our research and development expenses are well documented in our SEC filings.”

In the response, Intuit lambasts the IRS’s new tax filing software. “A government-run tax preparation system is a solution in search of a problem,” the letter says. “Most Americans don’t want the tax collector and enforcer to also serve as the tax preparer.”

@Jayhawks 2023  I do not believe that Intuit spent any of the $94M fixing problems in ProSeries.

[Cand6x]

@IntuitGabi This is still being incorrectly calculated. When is an update expected?

[IntuitGabi]

We were unable to reproduce this experience. Contact support and be sure to provide your expert a sanitized file for them to escalate if needed. 

[jean71]

I don't know why you cannot reproduce this error. It happened to me today also. I had a 1040 with SE health insurance for both health premiums and long-term care premiums. The software brought only the LTC premiums over to Iowa incorrectly, as both types of premiums have already reduced federal taxable income. Both types of premiums were entered on the separate lines of federal Schedule C.  

[mshowe67]

I still don't see any place to enter premiums paid for private health insurance on IA 1040

[mshowe67]

Never mind.  Finally found my answer:

• Additional Iowa Health Insurance Premiums Deduction: This deduction is no longer allowed for everyone. Starting with the 2023 tax year, the additional Iowa health insurance premiums deduction will be limited to taxpayers age 65 or older with Iowa taxable income of $100,000 or less.

[jean71]

This ProSeries error has never been fixed! I am having to zero out the deduction for all health insurance premiums, including Medicare premiums, on Iowa Line 15. The client I am working on was able to itemize on federal, so if anything, he should only deduct the amount disallowed for percent of AGI reduction, or maybe not even that. 

I will say the Iowa 1040 instructions are not helpful in explaining this and will have many people making this same error. I was able to confirm my decision at Iowa DOR online where I found the following:

"Similar to previous tax years, this deduction is allowed to the extent that the health insurance is not otherwise deducted in computing federal taxable income. In other words, an additional deduction is not allowed if the same health insurance premiums are deducted as a self-employed health insurance deduction or as an itemized deduction."

Come on, ProSeries! Pay attention and get this corrected as it will probably be the same next year.

[The_AntiTax_Man]

@IntuitGabi Please provided status of this known issue in the PS23 Iowa module..

[taxiowa]

   I am with you Jean.  It would be simply calculations/math to come to correct deduction for health insurance for those folks over 65.  However you have to look at the big picture.  We are from Iowa and know the rules and with Proseries we do have the ability to override and file (albeit with shutting off error checking).  So I guess my point is to #1 pay attention to this forum to often look for errors and #2 accept that we do want Intuit to make sure federal returns are filed and calculated correctly.  It would be nice to have both Iowa and IRS perfect but may not happen.  Lots of states had problems this last year.