ProSeries Calculation of Self-Employed Health Insurance Deduction with PTC

[taxgirl0216]

Good Morning All,

I am questioning the software's calculation of Self-Employed Health Insurance Deduction. 

Taxpayer paid $8,080 for Health Premiums and on the tax return has to pay back $3,074 of Premium Tax Credit. So naturally I would guess that the self-employed health insurance deduction would be $11,154.

I link the Schedule C to the 1095-A on the software and the software calculates the Self-Employed Health Insurance Deduction as $10,788. It won't let me drill down to see how that number was calculated. 

Schedule C has enough income to take the full deduction. 

Any ideas on the difference or how to see the calculation?

Thanks in advance.

[jeffmcpa2010]

Please let us know what tax year you are working on.

[taxgirl0216]

Sure thing, it's for 2021

[rbynaker]

Does it dump $366 onto Sch A Medical?

Unfortunately the iterative calculation sometimes results in an unsolvable math problem.  When the software encounters this is seems to cough up the difference on Sch A.  If you're in a disaster area you might be able to play around with an IRA or SEP-IRA deduction to see how the numbers change (check the disaster rules to see if the retirement contribution deadline was also extended).  Otherwise it's too late to do much about it.  I've seen situations where a $1,000 IRA contribution lowers AGI enough to save $3,000 in APTC payback.

[taxgirl0216]

It does dump the excess onto Sch. A. You would think it would be the $366...but it is $374? Odd.

Here is a summary of the numbers:

Monthly Premiums = $14,985

Less: Advanced Premium Tax Credit $6,905

Add: Premium Tax Credit Payback $3,074

SE Health My Calculation = 11,154 (Also matches the annual contribution amount on Form 8962)

Software:

SE Health = 10,788

Sch. A Dump = $375

[TaxGuyBill]

The Revenue Procedure says we can use any reasonable method (or something like that).

So I would put that $375 in the spot on the Schedule C worksheet for non-Marketplace insurance.  That will then change the calculation of the Premium Tax Credit, so look at the new numbers.  Then, if necessary, keep changing that spot on Schedule C until you get fairly close to the numbers matching up.

[rbynaker]

Okay, close enough.  ProSeries does weird things with rounding.  I forget which number but something must always be a multiple of 12.  Looks like it's the $10,788.

I agree with Bill, start plugging away until you get a number that's a little bit closer.  I'm not sure I would want to leave a $375 for AGI adjustment on the table.  You can usually get closer than that (but it depends on the circular math).

I'm fairly certain that plugging $366 in will result in more PTC (less repayment) making the $366 number too high.  So then maybe try $300 or $200 and keep adjusting until you don't deduct "too much".  Sounds like you have a good grasp on where the limit is, it's just a matter of convincing the software to accept your alternative "reasonable method."

[taxgirl0216]

Thank you everyone for your responses! I agree, it will be a matter of plugging and testing etc.

I wonder why ProSeries doesn't compute the SE accurately. I guess it is just thrown off by the circular calculation?

Happy Holidays to all!

Lauren