Tax Software — Fail?

I had assumed, apparently too optimistically, that the major tax prep software programs would be able to easily handle the problem of reconciling the self-employed health insurance deduction (line 29 on form 1040) with the premium tax credit calculation (form 8962).  After all, as complex as the IRS instructions may be, the actual calculation is simple math.   IRS regulations have now given clear guidance, with two methods for calculation, and this should be a fairly easy task to integrate into the program software.

Unfortunately, this does not appear to be the case.  I personally use H&R Block tax prep software and buy the “Premium” version which is advertised as best for self-employed.  But when I experimented with the program, I found it didn’t seem to be making any reconciliation at all.  Instead, the program was erroneously calculating the tax credit based on the MAGI with whatever value had been previously entered as the total self-employment premium, without making any adjustments as required by IRS.

I called H&R Block customer support and the representative seemed to immediately understand my concern, and said that this problem will be addressed in the next software update, which appears to be scheduled for January 22nd — so I will wait and see.

Meanwhile — Jay, a contributor at  https://obamacareguide.wordpress.com/post-questions-here/ – has found TaxAct software to fall short, in that it does appear to be able to handle the situation of a taxpayer who opts for a higher cost plan that the benchmark, second lowest cost silver plan.  He has taken the initiative to correspond with their support department, and share the information they provide — but so far has not received a satisfactory response from them.

Any users of TurboTax out there?   Please share – I hope I can get enough information to be able to post a report next month as to which, if any, software programs can be relied on to accurately perform the iterative reconciliation which will maximize the benefit to any self-employed tax-payer who qualifies for a credit.

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104 thoughts on “Tax Software — Fail?

  1. I’ve been in constant contact with TurboTax about this issue. I use TT ‘Home and Business’ and for the moment, TT does not calculate self employed health insurance deduction at all, or if it does (in my case), it’s wrong. I’ve been assured that full functionality will be in by 1/22, but I have doubts. See https://ttlc.intuit.com/questions/2593914-turbotax-2014-1040-line-29-self-employed-health-insurance-deduction-is-incorrect?jump_to=comment_4267128 for my discussion thread.

    • I just checked H&R Block online. They don’t even give you a warning now at wrap up and accuracy check that they’re not computing the deduction correctly! If you go back and check the deduction they give you, it’s wrong, and it can make a huge difference in the cap if it puts you into the higher federal poverty bracket.

  2. With TurboTax online, I was having problems up until today accessing the Health Insurance section to enter information from Form 1095-A. That glitch is fixed and there is also a question that asks if you are self-employed. As MSB stated, the calculations are not yet available. The online version states form for this situation will be available soon.

  3. Below is an email I received from a supervisor at TaxACT® about the issue of their software not allowing for a Form 1040 Line 29 tax deduction for Self-Employed Health Insurance in an amount that the taxpayer paid for a health insurance plan that had premiums which exceeded the premiums for the SLCSP.

    From TaxACT® (on 01/16/15):

    We have discussed this issue with our Development Department and have confirmed another calculation does need to take place. Our Development Department is currently working on an update to correct this issue. We will notify you via email once the update has occurred. We do apologize for the inconvenience this has caused you.

  4. I received an email this morning (01/18/15) from TurboTax stating the self-employed portion of the Health Insurance section will be available on Thursday morning (01/22/15). This is in-line with what MSB posted on 01/15/15.

  5. Got the latest TT tax update today. It is appears to be calculating Form 8962 OK, but it still does not put any value in 1040 Line 29, or perform the iterative calculation, the best I can tell. 😦

    • Thanks for the update– unfortunately I have similar bad news for H&R Block – I just installed their upgrade and it is a total fail. There is no connection between line 29 and the form 8962. If I enter a value for the premiums I paid in “Adjustments” section of the questionnaire, that value is not in any way reduced or adjusted by virtue of any advance premium tax credits — and if i don’t fill in my own number in line 29… then in the hypothetical situation I created, I lose the benefit of the self-employed deduction entirely and it is reported that I owe a clawback repayment tax.

      This is very disappointing. I will be following up with H&R Block. I will report back on whether the company is willing to honor their “maximum refund guarantee” and refund the cost of the software.

      • I’d add that if I run through the “Accuracy Review” at the end of the return, I do this notation:

        Inconsistency

        Since you are claiming the ACA premium tax credit and the self-employed health insurance deduction, you’ll need to get our next update to complete your return.

        You must fix this problem before filing.

        So it does appear that H&R Block is aware of the problem. It would be nice if they make this information more prominent, such as putting a notice in the self-employed health insurance section.

        Next updated is scheduled for February 12.

        I guess anyone who is hoping for an early refund of their tax credit is just going to have to wait.

      • Hi freelancer, et al,
        With my situation mirroring yours (I’m also getting the “Inconsistency: Since you are claiming the ACA premium tax credit and the self-employed health insurance deduction, you’ll need to get our next update to complete your return. You must fix this problem before filing”), I’m confirming that H&R Block’s Premium software will not allow a filing until the next update, which is scheduled for March 12. I chatted with H&R Block and their support suggested that an update might come out earlier, and to continue checking weekly….

    • I downloaded the Mac TT update, and actually deleted my 1095a and 8962 that I had pre-filled in, then went back to the interview and did the 1095a section again. TT entered the under reported self employed insurance deduction by $253.24 on 1040 Line 29. The most frustrating thing is that TT does not give me any indication how or where it is figuring out the number, and if I override the program and put in the correct number, I void the “accuracy” guarantee. Surreal.

      • That $253 could be within the “margin of error” between using the IRS “alternative” calculation vs. the “iterative” calculation. But mathematically, choosing that route is always going to benefit IRS and hurt the taxpayer, because it ends up producing both the minimum possible self-employed health insurance deduction and minimum possible credit. And from a computer programming/software design perspective, it makes no sense to do that. The tricky part isn’t the iterative math process, it is correlating that value to the appropriate federal poverty line multiplier, which can change as the other values change.

      • Here’s how TT figures 1040 line 29: “8962 Line 8a” – (“8962 Line 11b” – “8962 Line 11a”). In my reading of the IRS 26 CFR 601.105, this is NOT a method for arriving at the deduction.

      • MSB, that does not even begin to make sense? Did you mean to say that TT is deducting the line 11b (SLCSP) amount from the 11a (premium amount), for line 29? That is still completely wrong, but at least it would result in a positive figure if premium amount is higher than SLCSP.

        If 11a is lower than SLCSP — which would occur if the taxpayer opted for a Bronze policy or the very lowest priced Silver plan, then subtracting out the SLCSP would result in a negative figure — and doing the math the way you suggest would simply have no bearing whatsoever to what the taxpayer actually paid for insurance.

        This mess is starting to get me wondering what other calculations the tax prep software gets wrong.

  6. Well…still fighting with TurboTax and the SE Health Insurance deduction…but made a little progress. I can now get it to calculate my excess premium payment and enter it on 1040 Line 29…ALMOST! If I enter $0, for health insurance premiums paid on my business expense(as instructed), it WILL NOT put the excess on Line 29, but will put it as a expense on Schedule A Line 1(worksheet line 2b). If I put ANY amount (from $1 to the full annual premiums pd) in health insurance business expense it will figure the excess premium amount and ADD IT to the amount I entered. So, for right now, I have entered $1 and it seems to calculate correctly, but the amount in 1040 Line 29 is $1 too high. Seems I need to enter something to trigger the SE deduction verses the Schedule A deduction.
    The other thing I learned is that is seems to work better if I stick with the interview method of entering data…if I enter information directly on the forms, it really gets confused.

    • Well, TT seems to be working better for me now. Made a call to TT support and she suggested leaving the question for Business Expense – Health Insurance Premiums “blank” and opposed to entering “0”. That seems to help, but it took a bit. The program would vacillate between the correct calculation (Line 29 deduction) and the incorrect calculation (Schedule A deduction) for a couple of hours while I was working on other parts of the return. It finally settled on the correct calculation and has remained there and also adjusted the calculation correctly when I made changes in other parts of the return. Helpfully things continue working smoothly through to filing.

      • Thanks for the link MSB. I was happy just to get a calculation…now I am worried it may not be correct! 😦 Will look through your calcs and do some of my own to see what I find. Thanks.

      • Hey MSB…i would be curious to now that when you using your spreadsheet, does the resulting SEHI deduction amount from Iteration #2, is close to the value for Form 8962 Line 8a? Mine is not, but in my mind it should. PS I believe your spreadsheet is correct.

      • My actual situation is a little different (I actually have to enter some $$ on my sched C SEHI for my kids ins. costs) but if I understand your question, if you enter the Annual Contribution from 8962 line A into the first iteration, the 2nd iteration comes up within a dollar (actually within 19 cents) of the final goal for me too. I just like to start from the no-subsidy place to show it works.

      • MSB…also for clarification…your column labeled “SE Health Insurance Deduction” really should be labeled “Annual Contribution for Healthcare”. This value will not be the same as the SEHI deduction amount unless your premium amount and the SLCSP amounts are the same. At least that is my thinking. 🙂

      • My mistake–you are correct Richard. The column should be labeled Annual contribution. I got confused because I’m consistently getting a different number on my spreadsheet than TT. Anybody detect any flaws in the sheets calculations?

      • I’ve double checked your math and it looks good to me. It might help to annotate the spreadsheet to make it a little more clear how it is being done — but I think you’ve gone beyond the call of duty already! It’s a huge help to us all that you took the time to work up this basic template.

      • Richard, one problem with that process is that it would not address the needs of a taxpayer who was only buying an exchange based policy for part of the year. For example, let’s say that a taxpayer had a grandfathered policy with premiums of $500 a month from January through March, and then switched to an exchange-based policy with a premium of $600 a month in April. So without a subsidy or tax credit, that person would have paid out a total of $6900 for the year, but only $5400 would be reflected on the 1095-A form. So if the tax software simply draws from that field, it is not going to reflect the correct totals. Given the long open enrollment period last year, along with inconsistent state rules about extension of grandfathered plans, I think there will be a lot of taxpayers who had insurance all year, but only part-year coverage via an exchange.

        I think the software should have been designed with a separate questionnaire or form for entry of self-employed health insurance amounts, with one field for exchange-based premiums, and a separate field for “other” insurance. That would give the software the information needed to sort one from the other and do a proper reconciliation. It’s an easy thing to do, no different from separately entering income reflected on 1099s with other cash receipts on the schedule C.

    • Freelancer…just to clarify my first post a bit…i guess in my case, where I was on the exchange for the full year, leaving the business health insurance premium question blank verses 0 did seem to get the program to operate correctly. It might have been a fluke, I am not sure. Or maybe it just took some time for TT to “warm up” to my return and calculate correctly, not really sure. However, based on my struggles getting to this point, I THINK TT would handle your partial year exchange example OK. In your example, if you entered the off exchange premium payments into the question on SEHI premiums paid, and completed the 1095-A section, I think it would calculate the appropriate SEHI premium deduction (on-exchange) and add it to the amount you entered for off-exchange and put the correct amount on Line 29. Maybe 🙂

      I guess my concerns with TT now are two fold. First, it appears to me that TT is using the alternate method (2 iterations) verses the iterative approach. I guess this is OK, but I would have expected better. Second, using MSB’s spreadsheet, I SHOULD be able to duplicate what I think TT is doing (2 iterations) but I can not. The only way I can get their result is to use an artificially high starting point in the calculation (high tentative SEHI deduction resulting in lower modified AGI) as opposed to what is described in the IRS docs as outline here and by Harry Sit’s blog..

      • The problem is that we are all now very sophisticated in understanding what needs to be done. Many taxpayers will simply buy the tax software without having thought about this issue, and accept whatever numbers the software comes up with. It sounds like the instructions for TT are confusing enough that you had to fiddle with things and ask for help — and you still are getting a number that might be acceptable for IRS, but isn’t giving you the full benefit you are entitled to.

        I think MSB’s spreadsheet is very helpful, both because it shows how the calculation should be done, and because it also demonstrates what the software should be capable of. It’s a combination of doing a repetitive, circular calculation along with drawing a multiplier value from a table that will change depending on the relationship of the final AGI to the federal poverty schedule. That’s a complex task for us — MSB either wasn’t able or didn’t want to spend the time programming the spreadsheet from the table. (I think it’s a “lookup” function in Excel). But the tax software programs are already built around looking up values in tables – that’s how they calculate the tax in the end.

        I’m still waiting to see what H&R Block comes up with on February 12th. If nothing else, if the software can’t get it right, I think some of us should be able to collect on our software company’s “maximum refund guarantee” (both TT & HRBlock say they will refund the cost of the software if another tax prep method results in a larger refund or smaller amount of tax owed).

      • I didn’t have time to automate the lookup–I’m in the middle of a work jag so I did the best I could in a small window. I have the calcs all worked out to figure for Subsidy calculation as well–it just didn’t seem useful for this specific purpose.

  7. I received the following email today (01/24/15) from a TaxACT Taxpayer Support Services representative:

    “I can confirm the update has been released, and once you review the alerts within your return you should then see the newly reflected amount for the Self-Employed Health Insurance Deduction.”

    I confirm that this update properly calculated for me the amount that should appear of Form 1040 Line 29 as a Self-Employed Health Insurance Deduction. I compared the amount calculated by the software to what I previously manually calculated and the amounts equal.

    • That’s great news – and kudos to you for pressing them on on this with your support emails!

      Does the software give you a way to enter in premium costs that are different from your 1095A amounts? For example, a questionnaire or data entry form that distinguishes between on-exchange and off-exchange expenses? I’m thinking of possible situations where the self-employed person is only buying on-exchange insurance for part of the year — so their total premiums for the year might be different than the total amounts reflected in the statement they receive from the exchange.

      • In the Business Income section of the TaxACT software it asks for the health insurance premiums paid. I inserted here the cumulative total of the net monthly premiums I paid (that is, the full premium of the On-Exchange health plan I selected less the advance monthly subsidy).

        In the Health Insurance Premium Tax Credit section of the software I filled-in the information from Form 1095-A.

        The software calculates the Form 8962 entries and adjusts accordingly the amount of premiums I paid to arrive at the Form 1040 Line 29 deduction for Self-Employed Health Insurance.

        Note: In the instance where a taxpayer paid premiums for an Off-Exchange plan he or she would want to enter the amount in the Business Income section noted above. There is no distinguishment here between On-Exchange or Off-Exchange plan premiums. Entering additional premiums here will increase the Form 1040 Line 29 deduction for Self-Employed Health Insurance and of course lower AGI/MAGI which is reflected in the calculations the software automatically performs in preparing Form 8962.

  8. Richard, the Annual contribution and the SEHI are different, using the iterative method, at least according to all my calculations.

  9. I was getting a little confused with all the reply’s above so i thought I would start a new post to summarize where I am at.

    First I would like to thank Freelancer for his great site and MSB for his great worksheet. Not sure I could have figured this all out without you! 🙂

    As of this morning I am happy to report TurboTax H&B seems to be calculating my return, including my SE health insurance deduction perfectly. It was a struggle getting to this point, but all seems well now. I think some of my struggles were due to starting to work on my return prior to TT being ready to handle the SEHI deduction. My struggles with what I would describe as “vacillating” calculations was probably due to this. Live and learn I guess.

    I can confirm that if I enter $0 (or leave blank) for the amount of premiums paid for self employed health insurance in the business expenses question (schedule f for me, assume it works in sch c also) and fill out the 1095-A information, the program calculates my deduction correctly. Yea!

    I can also confirm (using MSB’s spreadsheet, slightly modified, see below) that TT calculates my deduction correctly and iterates to the nearest $1 as I would expect. Yea!

    To get MSB’s spreadsheet to work correct for me, I added a few columns. I added the two he added in his update (Columns K and L). I also added one more…column M I called SEHI deduction with the value being column L minus F4 (assuming F4 was my annual premium payment). I then modified the formula for column F to make the tentative SEHI deduction equal to column M from the row above. ie F5 = M4, etc Doing this resulted in my spreadsheet calculations matching TT to the dollar. Yea!

    Thanks all for your assistance.

    PS…this post is already really long (sorry) but I thought I would throw out one more sort of related question that I have been pondering (assuming anyone is still reading :)) Is anyone trying to reconcile, or should I worry about the fact that my SEHI calculations are assuming my 12 monthly premium payments for my ACA plan were all made in 2014 when they really were not? I made my January 2014 premium payment in 2013, and made my January 2015 in 2014. My 2015 premium is about $120 higher than my 2014 premium.

    • Really interesting update, Richard, but I’m not exactly following how your SEHI works. I’ve removed all protections from the on line spreadsheet (except the applicable figure section) so if you would like to update the columns with your suggestion that would be great. Thanks for your persistance!

      PS: I too was wondering about the paying Jan 14 in Dec 13–we’ll see what’s actually on the 1095a I get from the exchange.

      • MSB I was not able to figure out how to edit the sheet in the link you provided…it did not want to let make changes. I made a copy of yours and made changes to reflect what worked for me. Here is the link. Let me know what you think.

        https://docs.google.com/spreadsheets/d/1wufDknvZDrIFSqfOspCEVaE01X3THYrtH45lZBP9cUw/edit?usp=sharing

        The 1095-A I received (downloaded from Healthcare.gov actually) shows my 2014 premium payment for all months of the year, even the one in Jan 2014 that was actually paid in Nov 2013.

      • My % of poverty was based on a family of 4–might be the reason for bad results–thanks for your modifications on your spreadsheet!

      • Forgot to add…to make sure it was actually working the way I thought it was…I changes the data to match mine. This included the poverty level value and the SLCSP. That is why I added the cell for the poverty level so it was clear what I did.

      • Form 1095-A reports premium cost not what/when you paid. Premium costs are compared to SLSCP and MAGI determine subsidy. What your expense is in calendar year determines your MAGI not your SE income, subject to limitations.

        If you prepaid Jan 2014 in 2013, you may have already deducted that amount in 2013 if your Sch C is on cash basis. Same case for Jan 2015 if prepaid in 2014 you may be able to deduct in 2014. Taxpayer can or may be required to treat prepayments as deductible in year of expense under certain rules. This is not tax advice as it depends on specific tax situation. Neither the exchange or IRS know when you actually paid anything unless you are audited and have to support a line item. Bottom line, you should not deduct same payment twice so if deducted in 2013, don’t add to 2014 paid amount.

  10. I am using Tax Act and when I run the alerts, it gives me a new amount to enter for the SE health insurance premium Tax Credit adjustment worksheet. With this adjustment, which was less than what was actually paid with the advanced payment, it increased my line 29 SE insurance adjustment, lowered my adjusted gross income more instead of increasing it and increased my refundable premium credit. This increased the refund. Which is not right. I’m getting to deduct more of the health insurance premium credit, I should be deducting less from the AGI, which in turn means less of the additional premium credit.
    On form 8962 you are suppose to check the box to turn off the PTC calculation, but when I do that, it has it that all of the premium tax credit has to be paid back and zeroes out what we paid for the actual premiums.

    • MaryAnn, from what you describe, it sounds like Tax Act is doing what it’s supposed to do — reconciling the two amounts (SE health deduction and tax credit) until they balance out. However, you might want to look at the links to the spreadsheets in these comments to see whether the Tax Act amounts agree with the result you get when doing an iterative calculation by hand.

      • If I am getting more premium credit refunded, my se insurance deduction should go down too, not increase. And if I check the SE box on the 8962, the only thing that shows up on the monthly calculation is the advanced payment of PTC. All of the actual premium amounts paid and monthly premium amount of SLCSP gets wiped out. And I would owe instead of a refund. Am I seeing this wrong?

      • First — are you working with the latest update of TaxAct? MSB on this thread had problems with TaxAct, contacted their support and persuaded them to look into it, and reports that the problem was corrected with an update to the software. But if you haven’t downloaded the update, you could be having the same problem as he did to start with.

        If you had an exchange policy for all 12 months, then if you add the final figure for your self-employed health deduction (line 29) to the total of the tax credit (both advance and any credit owed you) — then the total should equal the amount of the premiums for the year.

        In other words, in past years, if you bought an insurance policy with $500/month premium — 500 x 12= $6000 — so you would have a $6000 deduction.

        With the premium tax credit, you are allowed to take the maximum credit that your income permits, and then also deduct the balance on line 29 — but because of the circular relationship between the two figures, there is some seesawing back and forth in values until you get to the final figure.

        But lets say you received a $200 month advance credit ($2400) and in the end it turns out that you were entitled to $3000, so IRS owes you a $600 credit. Then your self-employed premium deduction would be $3000. ($3000 deduction + $2400 advance credit + $600 refund = $6000, the total amount of the premium in my hypothetical.)

  11. Well, I have to report, unhappily, that TT is no longer calculating my SEHI deduction (1040 Line 29) correctly. I needed to make some changes in some income/expense items and now the calculation is no longer correct. if I right click on Line 29, and click “Data Source” the value in the box will change, appearing to perform iterative calculations. After 4 or 5 seconds the values in the box will cycle between two values ($1121 and $1122) which are very close to the correct value I calculate with the spreadsheet, but then it stops and puts some completely different value in the box! So sad 😦 And I thought they finally had it!

    • Update: After watching TT perform the 1040 Line 29 calculation several times and comparing it to my calculations using the spreadsheet, I am pretty sure I have figured out what is going on.
      As I described in my post above, the calculation seems to cycle between $1121 and $1122. The correct value according to the spreadsheet is $1121.48. It seems that after 4 or 5 seconds of cycling and deciding that it cannot iterate to an exact solution, it stops and puts $93 in the box. Where did this come from? If I look at my spreadsheet, $93 is the deduction that would result from the first iteration. Then what is my credit? According Freelancers description of the “Alternate” method, it should be the credit from the second iteration. But it is not. It is the credit calculated when the iterative method is carried to completion (last row in my spreadsheet).

      So to summarize, it seems that when TT cannot calculate the SEHI deduction using the iterative method to a result where the calculations “settle” on a single value, it defaults to a “hybrid” of the IRS iterative and alternate methods, ie using the SEHI deduction from the first iteration (alternate method) and the premium credit from a “almost” completed iterative calculation.

      This is not acceptable to me.

  12. Thought I would post a follow-up to my diatribe above. 🙂 Thanks again freelancer for giving me a stage to vent my frustrations.

    I had outlined my problem in an email to a TT support rep I was working with and have not heard a response. I had overridden the value on Line 29 to based on my calculations, but when you override, you always get those pesky TT warnings.

    My final solution was to decrease a business expense item a few dollars so that the calculation would converge correctly. Problem solved.

    • You have to use the 2013 poverty levels, as evidenced by the $15510 and $23550 amounts in the spreadsheet downloads. The reason the figures might be a little different than the online software is because of rounding. Use the rounded figures used in the online software and it will be the same. “Total exchange premiums paid” is line 33A in your 1095-A. “SLCHP” (should be SLCSP) is line 33B. I was wondering about using the 2013 poverty levels, but this is what Turbo Tax apparently does, because then the calculations turn out correct, and this is what MSB and Richard used, so I guess it’s correct.

      • Wow, now I did it with some lower deductions for my HSA (actually IRA), and it worked if I used 2014 federal poverty levels. Went back to original max IRA deduction, and it only worked with the 2013 levels (Turbo Tax). What’s going on?

      • The 2013 poverty levels are used to calculate the 2014 tax credit; 2014 FPL applies to the 2015 credit. That’s because the credit is calculated based on the FPL numbers in effect during the open enrollment period. (I also had confusion over this, but somewhere along the line I found the regulation that explains it).

  13. HR Block update: still a fail. Running the accuracy check on the software yields this message:

    “Since you’re claiming the ACA premium tax credit and the self-employed health insurance deduction, you’ll need to get our next update to complete our return.

    You must fix this problem before filing.”

    Next expected update: March 12, 2015

    • HrBlock update as of 3/26/2015: no longer says “wait for the next update”. Now it says

      “Since you’re claiming the ACA premium tax credit and the self-employed health insurance deduction, your return requires additional calculations that aren’t part of the program. To file an accurate return, we recommend you complete your return with an H&R Block Tax professional.

      You must fix this problem before filing.”

      Customer support says “sorry”.

      • There are many software options for filing which may work for your situation, but that depends on so many factors. I use TaxAct and it worked fine on my return with PTC and SEHID using iterative method. Only complaint is rounding on monthly Form 1095 entries which can be overridden on totals. That prevents efiling but can just print and mail forms. You could also do return using any program up to those calculations then do them by hand using Pub 974 and manually enter the results, print and mail. Tax pro may not be able to do much better and no real guarantee their results are correct unless you get same answer using more than one method. If you can wait, file extension and pay estimated taxes due by 4/15, the software may get updated later on. If you paid for program that doesn’t work, I’d demand a full refund. Some programs are free to use, but cost only to efile or for deluxe features so shop around for alternatives 2015 returns will require the same programmng so finding a solution that works for 2014 may be first step to picking solution for next year too.

  14. I also get this message. Very disappointing. Any confirmation of anyone’s software working? I also have the situation of only having an exchange rate policy for a partial year.

    • You can read through this thread — it looks like TaxAct and TurboTax are able to do the calculations correctly, though I have the impression that the TurboTax instructions might be confusing. It also depends on when you want to have you return filed. I personally am still waiting on some 1099’s- and my income is higher than anticipated, so I am going to owe IRS… so no particular hurry for me. But if you are expecting a significant tax refund or credit, then certainly you should be able to have the benefit of tax software that is capable of preparing your return now.

      • Thank you for your reply and the information you have provided on this site. I get the impression that you feel it is an issue they will resolve. I will try to be patient. It is the first time I have used their software and am finding it frustrating. Are they indicating it will be resolved on 3/12?

      • Hi Mike (and Freelancer),
        I mentioned in a post above that I chatted with H&R Block 2 weeks ago, and their support suggested that an update might come out earlier, and to continue checking weekly…. I’m hoping that the March 12 update will resolve the issue, and will report back here…

    • Hi Freelancer and Mike, (I cannot “Reply” to bottom of this thread, so I’ll reply here)
      AARGH, I just tried to update my H&RBlock, and it now states the next update is slated for March 26th! This is rediculous. I suppose I can print everything out and simply submit the forms via regular mail, but how assured is the math? I’ll give them a call tomorrow. Sigh.

  15. I think there is a limit on the deduction? Turbo Tax kept coming up with the same health insurance deduction with different IRA deductions. They take rounded monthly premium amounts, subtract line 33C of 1095-A, then add $300 if AGI is <200% Federal Poverty Level, $750 if between 200-300% FPL, and $1250 if between 300-400% federal poverty level to get the maximum clawback, as far as I can tell. Is this correct? The spreadsheets don't take this into account. I'll check out Tax Act.

    By the way, I can't figure out how to start a new comment, just reply. Sorry.

    • Well, Tax Act gave me about a $261 less deduction than Turbo Tax. It didn’t change the self-employed health insurance deduction when I changed my IRA deduction from $6500 to $4375. A limit on the deduction makes sense…you paid your premiums, and they have a maximum clawback, so the deduction limit would be the sum of those two.

    • So you earned more than anticipated and have to pay the clawback? If so, your self-employed health deduction might not change, because of the clawback limitations. The reason is that if, for example, your income is under 200% of FPL, but the amount of excess advance credit is more than $300 – the separate clawback limitation means that the numbers will continue to come up with $300 for the clawback even with modest changes in MAGI, until you hit that next bracket (where the $750 kicks in). And you are right – that would be tricky to add to our user-shared spreadsheets. Oy! Anyway — if you are getting different results with the two programs, I think that you should use whichever software gives you the best results. I think that the worst that could happen is that IRS figures it differently and sends you a notice to pay the balance– but I don’t think they would impose any sort of penalty in this situation. In fact, that’s pretty much official — IRS has already said that there won’t be penalties for late payments of clawback charges.

      • Well, Tax Act difference was $95 less deduction, actually, compared to Turbo Tax. (I don’t know how Tax Act came up with that number. I did double check that all the information was entered correctly). I had to go through the Review, and manually enter a suggested correction. Turbo Tax does it automatically as soon as you enter any changes, and it seems to give the correct deduction, based on the spreadsheet calculations, rounding, and considering the limits. I think there is a point where if you lower your IRA or SEP contribution, it reaches the limit of your health care deduction (the amount you pay). Good to know that amount, especially if you can’t put in the maximum contributions to your IRA and SEP. (Of course, the more you can contribute, the less your premiums and taxes would be, so it’s a swift return on investment). Also, you have to look at your final adjusted gross income, to see if you’re at an amount that might qualify you for the retirement savings credit, for example, or some other program (free filing, cost share reduction, etc.). Another interesting thing is that although the claw back amount is being paid in 2015, it’s treated as a 2014 deduction.

        Just when we have this figured out, they’ll simplify it next year!

        I like Turbo Tax, because it gives you the new deduction and tax amounts right away.

      • Another interesting thing is that although the claw back amount is being paid in 2015, it’s treated as a 2014 deduction.

        I think that this is because the “subsidy” is really an “advance tax credit” — so basically if you got too much “advance” credit, then it relates back to what you ought to have been paying before. In other words, if you had been able to more accurately guess your year-end income at the time you enrolled, you would then have paid more. So by relating it back (and not charging you interest if you can pay by April 15th) — then IRS is essentially restoring you to the position you would have been but for the underestimation of your income.

  16. Bottom line: I think Tax Act and Turbo Tax are working fine for this.

    I did make a mistake in Tax Act. In Tax Act, when going through Schedule C, they ask you to enter the total premiums you paid last year (fine, if all the premiums were from the Health Exchange). I put in the wrong amount, which accounts for the discrepancy I had with Turbo Tax. In Turbo Tax, when going through Schedule C, you don’t enter any premiums you paid for insurance you got from the exchange (but you can enter other insurance, so a little more flexibility that way…it would add the two types for the deduction). I played around with some different IRA contribution amounts, and got the same health insurance deductions in Turbo Tax and Tax Act and the spreadsheet (with the maximum claw back considered). Also, amazingly, the tax amounts for federal and state were the same! So it looks like Turbo Tax and Tax Act are working the way they should. The spread sheet is really good to know for sure you’re getting the deduction you should, and how it’s computed. Thank you guys for putting that up, the only thing on the internet I could find.

  17. Last comment, I promise. In Tax Act, you enter the total premiums you paid in Schedule C, then later during review you manually enter a claw back (or credit amount, I assume), so I guess it would take care of non-Exchange premium deductions. Turbo Tax just seems more opaque, with the two separated.

      • OK, you asked for it. I wish one could edit replies. I meant that it is more apparent in Turbo Tax what your deduction will be for Exchange premiums, and what you would have qualified for, and hence the amount you saved by underestimating your income They also have additional information on the page about the maximum amounts you have to repay.

        Publication 974 still not available. The reference most sited on how to do this, http://www.irs.gov/pub/irs-drop/rp-14-41.pdf doesn’t mention specifically the limitation amounts. No really simple explanation from the IRS.

        And why wouldn’t one deliberately underestimate one’s income on the financial aid application to the Exchange to receive the maximum advance premium tax credit, if you’re limited in the amount you have to pay back? I don’t see how you pay a penalty or interest. Sure, you get a smaller deduction in the end vs. accurately estimating your income, but that just means you paid less for your insurance.

  18. Can anyone explain what the Iterative method is meant to accomplish? My larger question is whether the Self-Employed Insurance Deduction uses something like the entire premium (prior to applying the APTC), or the actual amount paid (the subsidized amount). TurboTax online as of today seems to just take the actual amount paid, so I wonder if the software has Interative logic included yet.

    • The iterative method is designed to give you the maximum tax benefit available by reconciling two numbers that have a circular relationship with one another. The IRS is not going to let you have a double benefit: that is, if your premium is $10K and you are eligible for a $5K tax credit, your Self-Employed deduction is going to be reduced by the amount of the tax credit.

      You can *begin* the calculation using the total amount of the premiums (whether you paid them or not) — that will have the impact of also producing the maximum reduction in AGI, and therefore the largest possible tax credit. But then you have to go back and reduce the SEHI deduction by the amount of that credit, which will cause your AGI to go up — and in turn reducing the amount of the credit you are eligible for– which of then give you a figure that needs to be added back to the SEHI. If you are doing a hand calculation, you need to repeat that exercise about 4-6 times before you get to the point where the numbers settle to within $1 -which is when the IRS says the iterative calculation is done.

      The reason it is to your benefit to maximize the amount of the credit is that a tax credit gives you $1 for $1 value — whereas a tax deduction only gives you a tax savings equivalent to your marginal tax rate.

  19. Now, Tax Act gives a different result than Turbo Tax! Tax Act does not cap the deductible according to the Federal Poverty Level brackets, which is different than what they were doing last week! I don’t understand how your deductible can be more than the sum of the premiums you paid and the pay back from line 46. Tax Act computes the deductible now as is done in the spread sheets here. But shouldn’t the deductible be capped at the premiums you paid, plus the excess advance premium tax credit repayment (line 46), as seems to be done in Turbo Tax?

    • Douglas, if your only health care expense through the year is with insurance purchased via the exchange, then you are correct — the SEHI deductible amount when added to total premium tax credit allowed should be no more than than the total premium charged. Bottom line, it shouldn’t be more than what your actual out-of-pocket ends up being, taking into account whatever credit you are entitled to keep.

      However, there are also situations where the taxpayer may have other SEHI-deductible amounts – such as payments for dental insurance, long-term care insurance, or situations where there was non-exchange coverage for part of the year. So I don’t think that the tax software can be written to cap the total shown at line 29 without factoring in the various sources of the health insurance deduction. Ideally the tax software program should have its own guide or worksheet that lets the taxpayer enter in these different amounts on different lines. That isn’t hard to design — but the program I am using (HR Block Premium) does no give me that capability. (And of course I bought the more expensive Premium package with the expectation that I was paying for appropriate features geared to self-employed taxpayers).

      I am thinking that those of us who are aware of the issue may just have to do a hand calculation in the end, which may impair the ability to e-file. Either that, or you can opt to accept the software’s calculation — save all your records – and wait for IRS to contact you if you owe more taxes. I have had enough of those IRS letters in my lifetime to know how to respond — basically IRS will send you a letter 1-2 years down the line, they will say what they think you owe, and then you can either pay it or respond with an explanation. I have a feeling that 98% of taxpayers aren’t nearly as well-informed as we are about these calculations, so I anticipate that IRS is going to get a large number of filings that have this part wrong. Whether IRS is going to be able to catch these or not — I don’t know.

  20. I have a simple return, it’s easy for me to check different sites. I can report Tax Slayer is not doing it correctly. They only take premiums paid as the deduction. They do not give a warning either about the deduction not being correct if you’ve received advanced premium tax credits. I emailed their support to make them aware of this.

  21. At this point, here’s what I’d do. I’d use Turbo Tax Business edition to calculate the deduction. You can use it free (up until the point you file). They have a separate entry for insurance costs other than exchange premiums. It seems to calculate the exchange premium deduction correctly, with iterations and the caps. They give you a nice preview of your 1040. Then, if you can get a free file, transfer the information over there (the correct Self Employed Health Insurance deduction). olt.com lets you file free federal and state taxes with AGI up to $60,000. It’s nice to see that 2 or 3 different software programs are giving you the same results.

  22. Has anyone with H&R Block software received an update on this? I’m STILL getting the message that because I am claiming the ACA premium tax credit and the self-employed health insurance deduction, I can’t file until there is an update. I just called customer service and was told it “might” be corrected in the next update on April 2 or “maybe” before then …. argh!

    • It seems like the best bet right now is Turbo Tax Business, based on the comment from Douglas. You might want to find out whether H&R Block is willing to refund the cost of whatever software package you bought — or at least follow Douglas’ suggestion to use the Turbo Tax web site to calculate whatever tax refund you could expect. (He say there is no cost to use the site until you actually are ready to submit the return).

      If it turns out that you aren’t owed a refund or worse — that you owe a clawback amount – then there’s no particular hurry to file, and you can always get an extension and wait for H&R Block to get it’s software set up properly. But if you are looking at a substantial check coming your way from IRS, then I think it’s time to give up on H&R Block. They have been singing this same “next update” song for months.

  23. Thank you so much for all the information here. I’m married, self-employed but also took a part time job with two dependents. I’ve been trying to do our taxes now for a couple of weeks but was getting so confused with the SEHI deduction and the new PTC with the APPTC. We didn’t use market insurance until April so the first 3 months we were still on our old insurance. Which made the worksheets even more complicated. I tried to use H&R block like in the past and then free file once I have the numbers but they said I had to contact a rep. Oye. So, I’ve been trying to figure them out on my own. I put them aside for about a week but decided I really need to get these figured out. This thread and post have helped out alot. I’m going to take the time and use Turbo tax and then free file once I have the figures. I hope it works out. Trying to use the excel spreadsheet posted earlier but I don’t know what all the acronyms are. 🙂 Thanks again!

    • The acronyms: HSA is Health Savings Account. You could also use this column for IRA (Individual Retirement Account) or other allowed deductions. SEP is Simplified Employee Pension plan, a retirement plan many self employed people have. AGI is Adjusted Gross Income. SE is self employed. It should be SLCSP, which is Second Lowest Cost Silver Plan.
      Remember when using the spreadsheet that there are maximums amounts you’ll be required to pay back, listed here: https://www.law.cornell.edu/cfr/text/26/1.36B-4#a_3_ii, so your Self Employed Health Insurance (SEHI) deduction, for the Advance Premium Tax Credit (APTC) portion, will not be as much as what the spreadsheet shows when it exceeds the sum of the premiums you actually paid, plus this maximum amount. Of course your SEHI deduction will be more if you had other qualified expenses, including dental insurance, long term care insurance, and health insurance bought off the exchange.

  24. Thanks for the info. I have been waiting for H&R block to update so I could file, but they kept delaying further so figured I needed to do something before then. so after reading everyones info above, got turbotax and reentered my taxes yesterday. it all looked good until I got to a health insurance tab and got message “Hmm, looks like we hit a snag in this section. Check back in a few minutes”. well its been around 20 hours and am still getting the message.
    Its funny though because the checking algorithm says everything is ok and I could file but I know some things are wrong. it doesnt seem very tight, probably hurried together.

    I picture some glitch identified and some programmer madly trying to fix it.
    I can see inconsistencies between info on 1095a form and irs instructions – the whole thing is apparently a mess. I have a combination of self employed, a non dependent son on my policy and EIC for another son, perfect storm of situations they dont seem to be dealing with very well.

    guess I will wait another day or two and see if turbotax corrects itself and maybe call them.

    thanks steve

  25. Not out of the woods yet–I filed using TT business back on 2/3, and today got a letter from the IRS asking for a copy of my 1095A to support the 8962. The only thing I can think of that TT’s rounding would have resulted in different bottom line numbers for my 1095A totals, so I rounded low for a few of the premium numbers in TT to ‘force’ the bottom line to equal the actual total on the 1095A (without using an override). We’ll see what the IRS has to say…in 8-10 weeks. Good thing I wasn’t counting on my refund any time soon.

  26. The Marketplace sends Form 1095A to IRS so they have the data you reported, however even small variance can generate a letter. Most tax programs use rounded monthly amount which creates overall difference of $1-6 but software should allow annual totals or unrounded monthly amounts. I suspect the IRS will have many variances betweeen Form 1095A they have on file and what taxpayers report on Form 8962. I plan to override annual totals and will file by mail rather than deal with the IRS over a few dollars.

  27. UltraTax just sent this answer to my email this morning:

    Our development staff is diligently working on implementing reporting requirements of the Premium Tax Credit (PTC) along with supporting worksheets for those claiming the self-employed health insurance premiums deduction for health insurance purchased through the Marketplace and various modified adjusted gross income calculations when claiming both a PTC and self-employed health insurance deduction. We still do not have a date on when the update will be released.

  28. Just chiming in to share that H&R Block is officially a no-go.

    According to users on H&R Blocks message boards, the promised March 26th did NOT correct the issue, and a new error message is directing affected users to file with an H&R Block AGENT in person: http://community.hrblock.com/t5/Health-Care/Premium-tax-credit-and-Self-employed-health-Deduction/m-p/65236#M840

    Anyone holding out hope for H&R Block should officially move on at this point.

    I’ve been following the discussion here (a.k.a. lurking) ever since I stumbled upon the circular SEHID issue myself. I started out using H&R Block (online), but later abandoned it once I discovered the thread here.

    Why this issue isn’t getting more attention in the media and from the software companies themselves is beyond me.

    I’ve managed to do the Simplified method on paper, and will use the spreadsheet and notes so graciously provided by MSB and Richard to do the Iterative method for comparison. I’ll double check my work using Turbo Tax Business, but will probably paper file.

    How ironic that the additional complexity has driven me back to paper filing. Both the IRS (Pub. 974 in late-February? REALLY?) and the software companies need to do better next year.

  29. If any of you guys (Douglas, Richard, MSB, etc.) are still following this, could you please help me out with an off-exchange + Marketplace question as it pertains to the iterative spreadsheet? I’d greatly appreciate it.

    I can’t figure out how to factor my off-exchange premiums into MSB’s spreadsheet. I have 4 months of off-exchange premiums (totaling $1275), and 8 months of exchange premiums with a subsidy.

    1. How do I account for the off-exchange premiums within MSB’s spreadsheet? (I’m using the version with Richard’s revisions / additional columns.)

    2. What should I be using as my STARTING “Tentative SE Health Insurance Deduction” for the first iteration in the spreadsheet, given the $1275 in off-exchange premiums? Should it be the total of $1275 off-exchange + the amount from 1095-A line 33 A? Or do I add the off-exchange amount to the total at the end of each line before proceeding to the next iteration? Or do I leave the off-exchange amount out of the iterative calculation altogether and just add it to the final SE Health Insurance Deduction amount calculated for the exchange premiums?

    Was there final confirmation on whether Turbo Tax Business is using the alternate/simplified or the iterative method to calculate the deduction? The only time I’ve ever come up with the same figures as Turbo Tax is when I completely left off my off-exchange premiums. I got the same Net Premium Tax Credit on Form 8962 as they did, and I used the alternative/simplified method to get it. With the off-exchange amount added in (under the Business Expenses questionnaire), I can’t seem to match their figures or discern which method they used.

    Thanks in advance,

    Celeste

    • My situation was slightly different in that I had exchange premiums for the entire 12 months in addition to some off exchange premiums so I’m not sure the spreadsheet is entirely applicable to your situation. The only thing I did to a COPY of Richards sheet was to subtract the off-premium subsidy from my modified AGI (cells G4 to G10) at the end of the equation in those cells. (Example for cell G4: =B4-C4-D4-E4-F4-540 where my off exchange premium was $540). The $540 I entered directly on my schedule C, and then Turbotax was within about $4 of the correct number for the total deduction.

      • Thanks MSB. That put me on the right path. It turns out that in addition to adding in the off-exchange premiums like you said (and as Freelancer indicated below)…

        …I had to change the formula in column L (Total Premium Subsidy) to multiply my annual contribution (column K) by 2/3, to represent the two-thirds of the year (8 months) that I was on the exchange. (Others would have to sub in their own fraction for their on-exchange months.) The spreadsheet finally works for me with those two tweaks.

        My seesaw never converged, so it looks like Turbo Tax is just using the simplified method (aka the 2nd iteration). I was able to reproduce their math on paper, and that’s good enough for me.

        Thanks again for your help and for the handy spreadsheet.

    • Celeste — here is what I would suggest that you you try with TurboTax:

      When you are completing the Business Expenses questionnaire — in the section for entering your health insurance premiums, enter the $1275 off-exchange premiums (but do NOT enter any amount for on exchange).

      For the on-exchange, enter the info from your 1095-A for the 8 months that you had coverage. If you are entitled to a tax credit, it is only going to be a prorated amount for those months.

      Turbo Tax should be able to handle the calculations. I am new to TT so I don’t know all the ins and outs. I have figured out that there is a place in the program where you have to link the 1095 to your business (schedule C) to have the numbers carry over properly.

      If you are trying to double check with Richard’s spreadsheet, then you just have to account for that $1275 separately. For the math part I’d treat it as if it were a separate line item deduction — let’s pretend that the 1040 has a line 29a (non exchange insurance) and a line 29b (exchange premiums) — the spreadsheet would only be used to calculate the relationship between the 29b amount and tax credit. The 29a amount never change– it’s a fixed amount just like other adjustments to your income.

      Obviously the 1040 does not have a separate 29a line — but for your own purposes it’s pretty easy to create a worksheet that breaks things out that way.

      • Thanks Freelancer. I had already done the Turbo Tax entries as you indicated, based on some of the comments upthread. I can confirm that they do give explicit instructions to enter ONLY your off-exchange premiums with your business expenses, and they tell you that the exchange premiums will be handled later.

        I was only using the spreadsheet to doublecheck, and was very grateful to have a way to do so. You’re right. I was easily able to tweak the spreadheet to add in my off-exchange amount, and I treated it like an extra 1040 line item for each iteration. I also multiplied the Total Premium Subsidy by a fraction to prorate for the applicable months.

        I’ve decided to file with TaxAct for free instead of paper filing. TaxAct gave me the same calculations as Turbo Tax, which also match my spreadsheet, so I’m finally sorted.

        Thanks everyone!!

  30. I used HR Block Premium on my PC to do our taxes, same as the last 10 years or so.
    First it had a problem with 1095-A Health Insurance Marketplace Statement, something about the monthly premium amount of second lowest cost silver plan, which is all zeros on the form the IRS sent us and the way I filled it out. After calling HR Block, getting the wrong Dept., waiting for hours and finally telling the clueless girl “Don’t take this personally but I don’t believe what you just told me, can I speak to a supervisor”. I got a supervisor that explained how I had to click on the “Learn. more” button. “No not that one the other one”! That took me to a link to the Affordable care Act website that was supposed to explain how to fill it out. Somehow I got through that, don’t even ask me how because I was totally burnt out by then. I got to the e-file portion had everything filled in: bank routing number, PIN I had to call for etc. Clicked the “file taxes” button……..but NOOOOO!!! It paused and downloaded an update! After the update it did another accuracy test and came up with this:

    Inconsistency:
    since you’re claiming the self-employed health insurance deduction and have marketplace health insurance, your return requires additional calculations that aren’t part of our program. To file an accurate return, we recommend you complete your return with an H&R Block tax professional.
    You must fix this problem before filing.

    Son of a Bitch, Bastard!
    Called HR Block back. They said I had to either take my taxes to an HR office, or I could do the online “Best Of Both Worlds” where you do all the work and a Tax Professional looks at it and approves,… for $99. They gave me a code so it would be free. Of course the you are supposed to be able to upload last years tax file but that didn’t work – got an error message the the file was too large. Had to enter everything AGAIN. Plus you have to pay $40 to e-file. Needless to say this has turned out to be one of the biggest tax preparation ordeals I’ve ever endured. Yes I’m super pissed off at HR Block.
    Imagine…. “your return requires additional calculations that aren’t part of our program”.
    To boot, when I got done with the online version it came up with a result $60 less that the PC version! @&#((^&*

    • I’ve been waiting on H&R Premium since January – next update after next update. The new message as of March 26th – “we give up, you should pay to see one of our agents” – made me nearly apoplectic! I did go talk to their local agent – and she knew nothing about the problem or how to resolve it!

      What I ended up doing was entering what I’d paid for premiums on Line 29 and then subtracting the amount found on Form 8962 Line 11E from 29, and repeating until the difference was $1.

      So I now have a finished return, but the software won’t let me e-file it. H&R cost me all this headache, and delayed my refund by months, all because they were too lame to write a few extra lines of code! And if you look on their website, now that they know that they’re not going to fix the problem, can you find any mention warning potential purchasers that their product may fail them? No!

      H&R = Lame. Just needed to vent.

  31. Tips for anyone using TaxAct:

    TaxAct does NOT give clear instructions on which premiums to enter where (like Turbo Tax does), but Jay’s comment upthread is correct: In the Self-Employed Health Insurance Deduction questionnaire under your business, you enter your off-exchange premiums PLUS the portion of on-exchange premiums you paid out of pocket. (This differs from Turbo Tax. In TaxAct, if you only enter your off-exchange premiums here, your figures will be wrong and you won’t get your full health insurance deduction.)

    You also indicate when asked that you have Marketplace premiums, which you’ll provide info for in the 1095-A section later on.

    After you enter your 1095-A info and calculate your PTC (premium tax credit aka Form 8962), there’s separate screen where TaxAct shows you the result of the circular reconciliation and how it affects your Self-Employed Health Insurance Deduction. It reads as follows:

    Health Insurance – PTC – Self-Employed Health Insurance Deduction Adjustment

    “An adjustment is required to your self-employed health insurance deduction. Of the $XXXX premiums you paid, $XYX were applied toward the premium tax credit. An adjustment is required because these same premiums cannot also be claimed for the self-employed health insurance deduction. Enter $XYX below

    Lastly, for those who have ACA premiums FOR ONLY PART OF THE YEAR:

    On the 1095-A screen, be sure to leave the amounts BLANK on the first screen if you didn’t have ACA exchange premiums for the whole year. Do NOT enter annual total amounts in the boxes on that first screen, and do not enter 0. Enter your Marketplace ID only, and click “Continue” for the next screen. On that next screen, enter the amounts month by month for the months when you had exchange premiums.

    Hope that helps someone.

    • TurboTax has a free file Federal and State product, Freedom Edition, which includes the iterative deduction calculation, and Schedule C…most of the features of its Business Edition, I think. Your AGI must be $31,000 or less, active duty military with family income of $60,000 or less, or qualify for the Earned Income Tax Credit. https://turbotax.intuit.com/taxfreedom/

      • Thanks Douglas. ( I also meant to thank you in my previous comment for your TaxAct testing.)

        Do I have to use the “Clear and Start Over” feature to switch between the versions, or is there some other way? You mentioned something earlier about transfering between the two, but I wasn’t sure if you meant manually plugging the same figures into the Free version or that there was some automated way of importing the data.

  32. What I did to test the Freedom Edition was to create another account (different user name and password), and manually entered the data. I have a pretty simple business return. If you only have one account, you can “upgrade” with data transfer, if need be. I don’t know if you can “downgrade” to the Freedom edition. The problem with the Freedom Edition is if you don’t qualify for free filing, it won’t show you the deduction or preview Schedule A, etc. (it will, if you qualify). In the Business Edition, it will show you that before you have to pay anything. Start with the Freedom Edition if you think you’ll qualify for free filing.

  33. Problem using H&R block Deluxe. Is there any other software that does not have this problem.
    When I try to enter my Self-employed health premiums. I get this message
    “Since you have marketplace health insurance your return requires additional calculations that aren’t part of our program”
    So why am I getting that message.
    Well I decided to try and fill out the called Affordable care Act and see if that corrected
    the problem.
    So I filled out that section using my Health insurance market place statement or form 1095-A
    I noticed there no place to enter the amount I paid for the health premium.
    So I decided to try enter my self employed health premiums when I did I got same message.
    “since you have marketplace health insurance your return requires additional calculations that aren’t part of our program.”
    Does that mean if you use Affordable care act Market place insurance you no longer enter
    in your self employed health insurance premiums that paid out of you pocket to get the market place insurance.
    Or does the H&R Block software have a problem if so. Which tax software does not have this problem.
    It would be pretty easy for the software them to tell you what to do before you start to use it what the problem will be.

    • You can get good feedback about various tax software in the Tax Software -Fail thread and other, newer posts and comments on this site. TurboTax Home & Business will definitely calculate your taxes accurately and allow you to e-file. The less expensive TaxAct program also appears to function correctly.

  34. As did others, got left holding the bag by the H&R block “Premium” edition vs ACA. Apparently, Block got ‘their’ billions but left us holding the bag. Local office could not ‘fix’ the problem either & their Schedule ‘C’ returns start at $400. So, my return is probably incorrect. Can’t e-file the Fed return with the problem (and therefore can’t e-file state). NEVER had this much trouble. Considering lawsuit. Product should not be for sale without overlabel warning it “CANNOT resolve ACA figures vs self-employment”.

  35. Well, here we go again! I tested a scenario where the income crosses the 300% Federal Poverty level border, and olt.com and TurboTax gave me a $1961 deduction and a $750 clawback, when I only paid $711 in premiums, so deduction should be $1461. TaxAct gives me a $1461 deduction and a $1250 clawback. The deduction should really be 1250 + 711 = $1961. H&R Block, fuggedaboutit, it’s worse than last year, won’t even let you preview the 1040. For a complete discussion of this particular situation, see: https://ttlc.intuit.com/questions/2941800-self-employed-health-insurance-deduction-and-advance-premium-tax-credit-clawback? I haven’t tested the software outside of this $500 “twilight zone,” but if you’re in this zone, I would make a retirement contribution to make everything copacetic, where your deduction is equal to the sum of the premiums you paid (and of course other incidental expenses) and the clawback amount.

    • Douglas, I personally don’t know what the correct calculation is, if you read the “edited” comment in the thread you linked to, it looks like the Turbo Tax calculation may be correct. Here’s what I am referring to:
      screenshot of comment from TurboTax forum

      I think the rationale is something like this: The math to calculate your deduction should be done without consideration about clawback limitations. So you are entitled to actually deduct more than you actually paid. This makes sense if you view the clawback limitation as being a separate benefit.

      I think your suggestion about contributing more to a retirement account is a good one, for those who have the funds to do so and haven’t already maxed out on retirement contributions, simply because it’s always a good idea to sock away as much as possible in retirement accounts. But not everyone can afford to do that.

      So this might just be a case of a loophole in IRS regulations that happens to work in favor of some people with lower incomes.

      • It’s a long discussion, isn’t it? Actually he changes his mind further down: “I did some more reading of CFR 1.36B-4T(a)(3)(iii). CFR 1.36B-4T(a)(3)(iii)(B) says, “… The limitation amount determined under this paragraph (a)(3)(iii) replaces the limitation amount that would otherwise be determined under the additional tax limitation table in paragraph (a)(3)(ii) of this section. …” (I think “(a)(3)(ii) of this section” really means CFR 1.36B-4(a)(3)(ii).) To me this means that the limitation that appears on Form 8962 line 28 should remain the amount originally determined on Worksheet W and should not be subsequently re-determined when the SE health insurance deduction lowers the household income. So now, instead of what I said in my comment immediately above this one, the proper Form 1040 amounts are line 29 = $1,961 and line 46 = $1250. This makes WAY more sense and agrees with the original intuition that line 29 should be out-of-pocket premiums plus the clawback. Whew!” My comment was: “That does make sense, now that I think about it. The income before the SEHI deduction was above the 300% Federal Poverty level, even after deducting the $711 premiums [and also if one were to deduct a $750 clawback]. One should have to pay the larger clawback. So you’re doing the right thing, paying back more, but getting the correct deduction. The only way you’re getting under that limit is by having the larger $1250 clawback, and even though your income is lower than 300% FPL at that point, you shouldn’t get by with just paying the smaller clawback. I mean the only thing getting you under the 300% is the extra $500 repayment, so you should have to pay it, yet you should get credit for it in the deduction too. So, just from a common sense point of view, I think you’re right, it should be $1961 deduction, and $1250 clawback. (TurboTax had $1958 and $750).”

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