Why is Pro Series not allowing an S Corp shareholder health insurance correctly reported on W-2 to flow to 1040 as a deduction when shareholder also receives a form 1095-A (with no premium tax Credit?)
What is the way around is if any? If not, what should I suggest to do the next year to avoid this issue and being able to take the health insurance deduction?
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Enter the 1095-A and link it to the corporation.
On the K-1 worksheet, DON'T enter the cost of health insurance, BUT you NEED to enter Medicare Wages. That SHOULD trigger the 1095-A (that you already linked to the corporation) to give the Self Employed Health Insurance deduction.
Yes, I did.
I believe, there is some IRS rule not allowing this. Trying to get more information and how to avoid this next time.
Just found this, and I am puzzled.
This is governed by Revenue procedure 2014-41, and leads to an unfavorable taxpayer conclusion, where essentially the PTC which they do not end up being allowed to claim reduces their SEHI adjustment.
I know there were lots of issues with the SEHI and PTC throughout the season. @TaxGuyBill may be able to weigh in on this.
On the K-1 worksheet, there is a section about health insurance. Because of the 1095-A you DON'T enter the cost of insurance there, but you DO need to enter the Medicare Wages (Box 5 of the W-2) in that section of the K-1 worksheet. Did you do that?
OK, I see the SE health insurance deduction worksheet I can link to the K1 and the medicare wages you are referring to. So you are saying do not link 1095A to the S Corp but enter the amount there, correct? Or do not include 1095A at all?
Enter the 1095-A and link it to the corporation.
On the K-1 worksheet, DON'T enter the cost of health insurance, BUT you NEED to enter Medicare Wages. That SHOULD trigger the 1095-A (that you already linked to the corporation) to give the Self Employed Health Insurance deduction.
Got it! Thank you!
I am curios. The 1095A does not flow to the 1040 health insurance deduction without this extra step due to the PTC limitation and SEHI?
Thanks, Lisa for tagging him. That was helpful!
For a S-corporation shareholder, the Self Employed Health Insurance deduction is limited to the person's regular wages from that corporation, which is Box 5 of the W-2 (for a Schedule C business the deduction is limited to the profit of the business). Until you fill that out, the program limits the deduction to $0 (zero wages equals zero deduction).
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