Tax Software Update

Calculation of self-employed health insurance deduction & advance premium health credit:

TaxAct:   MAYBE(?). Calculates using IRS iterative calculation

TurboTax:  MAYBE (?). Calculates  using IRS iterative calculation

HRBlock:  FAIL.  After install of 2/12/15 update, software reports:

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

(Based on individual, anecdotal reports. One user reports differing results from TaxAct vs. TurboTax)

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4 thoughts on “Tax Software Update

  1. From my software, UltraTax, today:
    At the time of this update, the IRS has still not released the new Publication 974 as referenced in Form 8962 instructions with further details and 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. Thomson Reuters highly recommends that you not file returns with a self-employed health insurance deduction for insurance purchased through the Marketplace. Complete calculations for Form 8962 will be provided on a future UltraTax/1040 update once the IRS releases Publication 974.

    • UltraTax is professional software used by accountants, right?

      As frustrating as this is, mid-February, I could see why professionals would be given that advice if the official IRS publication and worksheets haven’t been released, even though the draft regulations are probably good enough for individual taxpayers to rely on.

      I wonder if that is also what is going on with the HRBlock home software? I’m guessing that they would have an incentive to develop the home software in close tandem with the software they provide their in-office tax preparers.

  2. Can TaxAct be trusted to do the calculations right? I have a client who got monthly advance payments and at the end of the year ended up at an income level where there was a net premium tax credit. I put the total premiums paid on the SE health insurance worksheet, and when I ran alerts TaxAct told me a specific number to put in the “adjustment for premium tax credit” field. When I put that number the alert disappears, but if I put any other number there is still an alert.

    Also read an article that many of the 1095-A’s coming out have the SLCSP calculated incorrectly. Is there a way to tell if one is correct or not??

  3. TaxAct now works properly for my simple situation which is confirmed with my Excel worksheet using iterative calculation with my specific tax data. However, my form 1095-A from CCA is wrong and TaxAct uses rounded amounts not 2 decimals as they appear on the form.

    Anyone using exchange for subsidy needs to create their own records & proof of SLCSP. Get your SLCSP amount from any website that provides this, CCA or alternate (I save sreenshot as pdf file). Do this when you pick plan or before they update for the next year enrollment. Also track your plan premium cost for each month. if you prepay premiums track both, but form 1095-A reports monthly cost not what you paid each month. If you get monthy subsidy, track that amount as well. With this information you have what form 1095-A will report and can compare to confirm accuracy.

    What wlll IRS do if the form 1095-A they receive is different than what taxpayer reports? In my case the SLCSP is too high, which would give me higher credit than it should. Problem would occur if understated or premiums are incorrect so if form is wrong you should file a dispute to get corrected form. That could take 1-2 months and may still not resolve problem. If CCA doesn’t send corrected form, I will file based on my figures and wait to see what IRS does.

    Efiling using software requires no overrides on tax forms. You can file by mail if tax program doesn’t give right amount, but do that only if you are absolutely sure of your numbers. Rounding or slight amount differences are generally ignored by IRS. However, tax programs should not force rounding on their worksheet because form 1095-A reports actual amounts. In my case, it shorts subsidy by $3 because of rounding both premiums and SLCSP. Not a lot but would not be a problem at all if worksheet could accept actual not rounded amounts. I could fool program to efile by entering alternative amounts so total works out to be correct, but that data is part of filed tax return.

    Another complication or confusion is difference in paid versus monthly premium cost. If you are cash basis taxpayer, when you pay determines deductible year. Accrual basis doesn’t cause difference even if you prepay each month. For cash basis taxpayer, this can cause some variances from what is deductible as paid premiums versus what form 1095-A shows as premium cost for the month. Self-employed can also deduct other premiums (e.g. dental) on Form 1040 line 29 which are not subject to subsidy calculations so track that as well for determining AGI.

    The regulations and forms are way to complicated even for experts to understand. It’s not surprising that tax programs and exchanges are havng so many problems. When people have situations like partial year, relocating, marital/job changes, etc. it’s even more complex. Don’t rely on tax programs or tax preparers without doing your own calculations or at least use two sources to confirm amounts and hope 2015 is better than 2014.

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