Level 10

Question

Repayment of excess advance payment of the PTC

Forum|Forum|1 year ago
September 17, 2024
3 replies
28 views

The repayment amount is not treated by LC as SE health insurance (for purpose of the SE health insurance deduction.) Is this because it is not a medical insurance policy in the name of the business? Is it tax policy? Embarrassing that I am asking so late in the game, but a client wants an explanation. This TP is over 400% of poverty level. Thank you.

Lacerte Tax

This topic has been closed for replies.

PhoebeRoberts

Intuit Community Champion

The repayment amount is fine as SE health insurance. It's a weird circular calculation (per pg 47 of Pub 974), but the last time I had it, Lacerte did the math just fine.

S

strongsilenceAuthor

Level 10

Thanks @PhoebeRoberts then I am missing a check box or something. The only amount qualifying in the LC calculation is the difference between the premium and the credit (col. C).

2 brain farts later....

ahh, the deduction is limited to the SE income right? That is why the repayment flows to Schedule A, medical. I think that is it.

S

strongsilenceAuthor

Level 10

The TP has sufficient SE income. If the TP has the policy, with the spouse as the covered person, would it be 1. allowed; and 2. more of a benefit?

T

TaxGuyBill

Level 15

Yes, it is limited to SE income for that business.

In my opinion either business can claim the health plan, even if the 'other' spouse is the first/primary person on the policy.

S

strongsilenceAuthor

Level 10

thank you. I look into this idea.

qbteachmt

Level 15

For reference, I want to comment on this part: "Is this because it is not a medical insurance policy in the name of the business?"

It is in the name of the business, when it is in the name of the person who is the business. I like to use the word "parity." If you can have group insurance in the name of the business, but someone else is over 65 and on Medicare, it isn't "fair" that they cannot also get a policy in the name of the business. But in essence, their Medicare coverage (or marketplace coverage) does the same thing your group plan is doing, so it gets the same favored treatment. Same treatment = parity.

Don't yell at us; we're volunteers

N

nvrvwls

Level 2

I am also having trouble with this same issue.

Taxpayers are a joint couple with 2 Schedule C's. They paid ~$4K out of pocket and got Advance Premium Tax Credit of ~$11K. The full Premium Tax Credit is being repaid.

The primary taxpayer's Schedule C makes plenty of money for the deduction. The spouse's Schedule C has a loss.

Only the premiums paid out of pocket are flowing to Schedule 1 as a Sec 162(L) adjustment. The rest is flowing to Schedule A.

On the 1095-A inputs, i linked it to the primary taxpayer's Schedule C (the profitable one).

Any thoughts?

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nvrvwls

Level 2

I'm leaning toward entering the premiums repaid on the adjustments tab inputs as "Premiums not entered elsewhere". Not sure if that is right though.

Whether or not I enter the adjustment I get diagnostic #43498: "This return ran through the IRS Publication 974 iterative calculation method for the self-employed health insurance deduction/premium tax credit and failed to converge on a valid result. The program used the simplified Calculation Method instead."

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