Welcome back! Ask questions, get answers, and join our large community of tax professionals.
cancel
Showing results for 
Search instead for 
Did you mean: 

Self-employed health insurance and excess advanced premium tax credit repayment

Highlighted
Level 1
last updated ‎February 01, 2020 12:09 PM

Self-employed client had higher than expected income, which resulted in excess advanced premium tax credit repayment of $24,000.  Client can take the $24K as a self-employed medical insurance deduction, but on my program, then that seems to lower the aptc repayment.  Like a circular equation. . .?

 

Labels (1)
0 Cheers
5 Replies 5
Highlighted
Level 10
last updated ‎February 01, 2020 12:09 PM

It IS a circular calculation.

** I'm still a champion... of the world! Even without The Lounge.
Highlighted
Level 12
last updated ‎February 01, 2020 12:09 PM

@Chris sick wrote:

Self-employed client had higher than expected income, which resulted in excess advanced premium tax credit repayment of $24,000.

 


How much higher was his income?

If he can contribute to retirement accounts (such as IRAs and SEPs) to lower their income below 400% of the Federal Poverty Level, you can limit the repayment to $2650 (or less), which would save your client roughly $20,000 on their tax return.

Highlighted
Level 1
last updated ‎February 01, 2020 12:09 PM

Yes, that would've been my 1st solution, but the client brought in his 2018 taxes, so he's behind a year.

Highlighted
Level 12
last updated ‎February 01, 2020 12:09 PM

Bummer.

Next questions are (1) Is he married and (2) if so, does the 1095-A also cover someone else in his family?  If so, check out if filing as Married Filing Separately would help.  The 1095-A would be split, and if one of the spouse's incomes is under 400% of the Federal Poverty Level, that portion of the repayment would be limited.

Highlighted
Level 1
last updated ‎February 01, 2020 12:09 PM

I am having the same issue with this and wanted a second opinion. When I finally get the "self-employed health insurance deduction" + "total premium tax credit" to equal the "monthly enrollment premiums" the repayment limitation kicks in. They have an "excess advance payment" based on the fact that their self-employed health insurance deduction puts them under the 401%.

Am I doing this correctly? It seems strange because now they get to 'keep' the "excess advance payment" even though they never really received the money. 

They way I read the instructions is that you can use any method you want but (Form 8962, line 24) + (Schedule 1, Line 16) has to be less than or equal to Form 8962, Line 11(a). 

Anyone else able to confirm this?

0 Cheers