Sub-S Health Insurance Deduction & APTC Repayment

[Mactaxes]

Sub-S Shareholder has increased wages in Box 1 of W-2 reporting $14,000+ of SE Health paid by the corporation on his behalf.  He also received a 1095-A with APTC paid in 2022 of $4,100.  The 1095-A, Column A indicates the $14,000+ premiums paid that are included in Box 1 of the W-2.  The Form 1095-A is linked to the S-Corp K-1 and the Medicare Wages are entered on the SE Health Worksheet.  The $4,100 APTC is subject to full repayment because MAGI is well over 401%

The SE Health Insurance deduction is calculated at $14,000+, the amount listed on the W-2.  It seems like the $4,100 of APTC repayment should also be eligible for the SE Health deduction since they are repaying the full amount on Schedule 2, but Proseries isn’t calculating it that way.

Or is the $4,100 repayment not eligible for the SE deduction because that amount was not included in Box 1 of the Shareholder’s W-2? 

I started in on the arduous Pub 974 worksheet calculations and Rev Proc 2014-14 over an hour ago with no solid answers.  

At the very least, shouldn’t Proseries carry the $4,100 APTC repayment to Schedule A as a medical expense?  It’s not showing up there either…

Are we missing something here??

[Just-Lisa-Now-]

At the bottom of the 1095A worksheet, did you link it to the K-1? 

And have you checked the boxes on the Fed Info Worksheet down near the bottom that say yes or no, can you be claimed as a dependent?

[Mactaxes]

Yes, the 1095-A is linked to the K-1 for all 12 months.  And yes, those boxes are checked that neither the taxpayer nor spouse can be claimed as a dependent of another taxpayer.  

[Just-Lisa-Now-]

TaxGuyBill is way better at this than I am, but I cant seem to get his name to "tag" in the post.  Maybe someone else can get his tag to work.

PS struggles with the SE Health Ins and Marketplace Insurance, you may have to go in manually to get the APTC repayment to be included as part of health insurance premiums.

.

[TaxGuyBill]

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@Mactaxes wrote:

The 1095-A, Column A indicates the $14,000+ premiums paid that are included in Box 1 of the W-2. 

The SE Health Insurance deduction is calculated at $14,000+, the amount listed on the W-2.  It seems like the $4,100 of APTC repayment should also be eligible for the SE Health deduction since they are repaying the full amount on Schedule 2, but Proseries isn’t calculating it that way.

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Column A shows the TOTAL cost of insurance.  You can't get a deduction for more than the cost of insurance.

In other words, if they did NOT need to repay the $4,100, their deduction would be $9,900 (the total cost, minus the credit they received).  So the $14,000 is already factoring in the repayment.

[Mactaxes]

I misspoke...now that I clarified with the client, his W-2, Box 1 includes the NET premiums paid (Column A - Column C).  And the remaining $4,000+ was for a supplemental policy.  So...back to the original question...can the $4,100 repayment be deducted as SE health?  The total ACTUAL paid by the client was $14K+ and now they also have to repay the $4,100 APTC on top of that.  

[TaxGuyBill · Accepted solution]

If the corporation didn't pay for it, it doesn't qualify as Self Employed Health Insurance.

For the future, the corporation should reimburse the full cost, not the net cost.

[Mactaxes]

Thank you TaxGuyBill for the clarification.  Agreed.  And we will work with them to correct this for this year.  An Insurance Agent signed them up last year and they say they didn't know they were receiving premium credits.  They reported what they paid each month to their PR department, so it's a shame they cannot deduct the repayment because I believe they would've reported it had they known (or understood).