The TurboTax Test: It works.

(…And I’ll tell you how)

Well, today is April Fool’s Day — but this post is no joke.

I’m a long time H&R Block user– but H&R Block essentially bit the dust when it didn’t manage to include the ability to reconcile the self employed health insurance deductions with exchange premium credit eligibility:  all self-employed taxpayers who bought policies from or their state exchange during 2014 are out of luck.   We’re greeted with a message that the software can’t do our taxes this year.

So off I went to buy new software.  This isn’t a good year for TurboTax users either, because this it the year that TurboTax changed it’s program and pricing policies.  If you want to have the program prepare a Schedule C, you’ve got to buy the highest price “Home and Business” edition — listed at $104.99 on the TurboTax softeare for the online product;  $99.99 for the  downloadable software.

But with a little shopping around I saved $35 — Amazon Prime members can download the software for $64.99, at least for now. Other retailers, such as Costco, also offering similar discounts. 

The software downloaded and installed without a problem.  There is a little bit of a learning curve for longtime H&R Block users.  The H&R Block interface seems to be tied a lot closer to the language and logic that is used by IRS in its instructions, whereas some things in TurboTax just aren’t labeled the way I expect, or entered in the places where I expected to find them.

But with a little bit of perseverance, I managed to get the hang of things and entered all of my data.  The good news is that it works! It correctly does the iterative calculation described by IRS.  It took me a while to figure out the math, but in the end I confirmed that it all matches up.

Here are a few tips for other H&R Block refugees:

1.  Nothing is going to work until you have completed your schedule C, so start with that.  You won’t get accurate numbers until you have completed the entire return– but if you want to play around with the numbers first, the schedule C needs to be filled out to show at least enough income to qualify you to take the Line 29 self-employed health insurance deduction.

2.  In TurboTax, you need to enter any non-exchange health insurance costs on a worksheet tied to your Schedule C. Use the “Topic List” under the “Tools” list to find the interactive entry sequence.   Do NOT enter any premiums paid for marketplace insurance here.  Instead, this is the area where you would enter premiums paid for other private health insurance if you were not covered on the exchange for the full year;  for premiums you pay for dependents who are not covered with an exchange policy; or for other forms of deductible insurance, such as a  long term care or adult dental policy.

3.  TurboTax has a link field to connect information from the 1095-A to your business: you must make sure that this is completed in order for the premiums from the 1095-A carried over to line 29.   This can be done either in form view using the “Business Related Premiums Smart Information Worksheet” on the bottom of the 1095-A form — or by choosing the appropriate option if you using the interactive interface.

4. If you fill the forms out correctly, the program should fill out the Form 8962 (the part that calculates your net premium credit) automatically.  I’m not so good at following instructions, so I managed to mess up that part and had to go back to complete a step that I missed. But if you just have a little more patience than me and follow the step-by-step  guide as it is presented, I don’t think you’ll have a problem.

I checked the math against Richard’s spreadsheet. I modified the sample spreadsheet to add an extra column for the non-exchange premiums mentioned in paragraph #2 above. (I have long-term care insurance I need to add in to the mix).  Also, because I have a Bronze HSA policy which costs less than the benchmark “second lowest cost” silver plan, I also created a column for my premium cost (the column A amount from the 1095-A).

I got final figures after 5 iterations.  For a final check I simply added the total amount of the “total premium subsidy” (column L in Richard’s sheet) to the self-employed health insurance line item amount (column M) — the total should agree with the full exchange premium cost (column A on the 1095-A).

However, several other TurboTax users have also reported correct results– so no need for ordinary taxpayers to do the double check on the numbers.  You are pretty safe to simply enter the data into the tax program and submit.




15 thoughts on “The TurboTax Test: It works.

  1. I had the same problem with H&R Block stringing me along, promising the next update would fix things. After interacting with two levels of customer support however, they offered to let me go through the online program with a personal tax adviser, free of charge. Hopefully, this will work out. If not, thanks for letting me know that TurboTax can handle the problem

  2. Thanks for all the time and care you’ve put into this blog! I’m having a problem with the woman who’s preparing my taxes and I’m hoping for some insight. I’m self-employed and my MAGI (even before self-employed health insurance deduction) is below 100% of the Fed. poverty level – lower than I had predicted when I signed up in late 3013. I had a gold plan through the marketplace for all of 2014, and I went for the advance payments of the tax credit. She’s saying that I should just deduct, on 1040 line 29, the full amount that I paid out-of-pocket for premiums, and use the resulting MAGI to do my 8962. In my (repeated, brain-numbing) reading of the instructions I’m getting that I need to use p974 to get accurate figures, but she says no. I’d love to be wrong, because p974 has been driving me totally crazy – I can’t figure it out – but I could use some guidance.

    • No, your tax lady is wrong. You need to do the calculation, and it is likely that you will get an additional tax credit if you do it right. It doesn’t matter that your income dipped below FPL — for purposes of calculating your premium credit it will be treated as if your income was exactly 100% of the FPL.

      I think in your particular case you could simply calculate the maximum tax credit available based on an income = 100% of FPL- let’s say that is $4000. Then subtract that amount from the total premium cost — let’s say that was $6000- and use the difference as your SEHI adjustment. So that would be a $2000 deduction.

      The reason you can skip the other calculation is simply that your income is below the minimum threshold, and the maximum tax credit won’t change if you reduce the income further — so you don’t run into the circular math problem.

      But don’t do what your tax person tells you – you shouldn’t be looking at your actual out of pocket, but rather the remainder after you subtract your maximum premium credit from the column A total costs of premiums. If you paid estimated taxes, then you’ll probably have 0 tax liability and a refund coming if you do that.

      • Thanks – it’s nice to be vindicated about tax lady – who is now no longer my tax lady.
        I’ve been doing my own taxes for more than 20 years with no problems – it’s just the ACA stuff that has me totally hornswaggled.
        I do want to understand how it works, so I’m hoping you can walk me through your suggestion.
        You say “calculate the maximum tax credit available based on an income = 100% of FPL- let’s say that is $4000.”. Is this something I’ll do on one of the forms or worksheets? I’ve been looking through them and I’m not finding it. Or is it just a formula based on the $11,670 100% of FPL number and the specific totals from my 1095a?

      • Albo — here is where the number come from. Your income percentile in relation the federal poverty line baseline give you an numerical percentile — that you find by looking it up on a chart. The FPL for one person for the 2014 tax return is $11,490. (See section 6 at The lookup chart is in section 7 of the Instructions for Form 8962.

        You are eligible for the PTC as long as you expected your income to be above FPL at the time you enrolled. The applicable multiplier for all income levels under 133% of FPL is 0.02 (2%).

        Since the regulations specify that if your AGI is below 100%, it will be treated as if it was exactly 100% — you would take 2% of the FPL (11,490). That’s $230 (total, for the year). So $230 is the most you would be required to pay for insurance, IF you bought the benchmark second lowest cost silver plan. If you had insurance for all 12 months of the year, that is what would be reflected as your “Annual Contribution” amount. (Column C on the Form 8962)

        So the next step is to subtract that number from the cost of that insurance. Let’s say the SLCSP policy is $400/month — so $4800 per year. When you subtract out your $230 share, you are left with $4,570. That is the maximum amount of premium tax credit that you are entitled to. (Column D).

        So let’s say you bought a more expensive Silver or Gold policy that cost $500/month — $6000 a year.

        If you subtract the maximum PTC ($4570) from the premium cost ($6000) — that leaves $1430. That $1430 is what should go on line 29.

        Again, the reason I think you don’t need to do the iterative calculation simply because you hit rock bottom with your income — but this is not explained at all in the printed instruction. I’m thinking that no matter how low your income goes, you can’t get more than $4570 as a tax credit, because that is what someone at FPL would get. But if you fill out the form 8962 exactly as instructed and your income is lower, you would get a lower personal contribution and higher PTC – but then you’d have to do the iterative calculation to figure it out. So, to keep the math easy – if your AGI was exactly $10,000, then 2% of that is $200 — and that’s the amount that ends up in line 8a of form 8962. Subtracting that from the Column B amount results in a maximum premium tax credit of $4600 — $30 more than before.

        But if you just do what I suggested: stick with the figure you get assuming the FPL income — you are losing $30 in tax credits, but saving yourself a headache and countless hours of time. IRS isn’t going to complain if you opt for a calculation that doesn’t maximize your credit — they will be happy to keep their $30. You aren’t getting any real benefit by claiming +$30 on line 29, because your income is so low that you probably don’t owe any taxes anyway– or if you do, your marginal rate is really low.

        If you have the software to do it, then you might as well let TaxAct or TurboTax do the calculation and file for your refund– but if just want to file on your own I’m just suggesting that you can save yourself some work simply because you know that you are at the bottom of the threshold.

        This post probably seems terribly confusing, but it may make more sense if you are looking at Form 8962 as you read it.

      • Well – apparently I’m not as stupid as I look 😉 I had figured out on my own that I needed to do a copy of Form 8962 using the 110% of FPL figure – I just had no idea what to do with the resulting figures. So – thank you – very helpful!

        If I’m understanding it correctly, simplified instructions for someone in my situation – that being anyone who’s preliminary AGI (before the line 29 deduction) is below 133% of the FPL – would be:

        Grab your 1095-A
        Subtract $230 from the “Annual Totals” (line 33) figure from column B
        Take the resulting figure and subtract it from the line 33, column A figure.
        The resulting figure is your good-enough calculation for the maximum line 29 deduction you can take.

        Is that right?

        One final question for you: do you know for sure that has updated their software and is doing all of this stuff correctly now? I had started my return on there a while back and abandoned it because it didn’t seem like they we’re up to speed, but I will go back and finish it on there if they are – I was mostly finished with it anyway.

      • Hmmm… I tried it with and I’m getting completely different figures. They’re saying I get NO line Self-employed health insurance, and that cuts my Net premium tax credit down – from $111 to $54. Not a huge amount of money, but it is confusing. Any thoughts?

  3. I am self employed and pay for my own health coverage through the marketplace. So am I understanding that you have to use the TurboTax Home and Business edition for this calculation to work? None of the other editions work with this? All my income comes from an LLC, so I don’t file a Schedule C (I get a K-1 from the LLC). The premier edition has everything I need as long as it handles this calculation too, and it costs $30 less than Home and Business.

    • I don’t know if you would need Home & Business with your situation. I assume that it was need because it is the only program that will do a schedule C, and the majority of self-employed individuals will need to do a Schedule C — but you could try out the Premier edition online and see whether it will let you link the 1095-A information to the K-1 business. You can use the online software without charge – they only require payment when you are ready to efile.

      • Just to follow up, I downloaded the Premier edition of TurboTax and it worked just fine. My taxes are now filed… just need to get a refund from H&R Block for their useless program 😦

  4. I thought if your MAGI was <100 FPL (i.e., you are eligible for Medcaid) and you choose to go through an exchange, you wouldn't be eligible for a PTC on your SEHI. I signed up through an exchange for a bronze plan, did not apply for APTC, and hoped my MAGI would be high enough to apply for a PTC when I filed my taxes. My MAGI is still below 100% FPL. Am I eligible to apply/calculate a PTC?

    • IF when you applied for insurance your income was under 100 FPL – and you opted to pay full cost for the policy after being referred to Medicaid (or denied eligibility for a PTC by the exchange in a non-expansion state) — then you are NOT eligible for a PTC.

      But if you estimated when you applied that your income would be above 100 FPL, (above 133% in expansion states) — and you were approved for exchange coverage based on that optimistic estimate — then you would be eligible for the PTC — basically because the system is not going to punish people for bad luck. (Imagine a person who has a job that pays $14,000 a year, but they get laid off in September — is it really fair to make that person pay back money?)

      Based on your situation, you probably will NOT be eligible for the PTC, because you don’t meet the requirements set out in the Form 8962 Instructions under the title, “Estimated household income at least 100% of the Federal poverty line.” So in a sense you may be losing out because of your honesty — but then again, you made a choice to pay more when theoretically you could have opted for free coverage via Medicaid. (I realize that wouldn’t be true if you live in a non-expansion state, but unfortunately the law was written with the assumption that every state have the expanded Medicaid eligibility, and nothing short of an act of Congress can change that).

      I think it really depends on how low your MAGI is. If it is significantly below 100% FPL – and unlikely to change — then I don’t think you could get exchange coverage in any case. However, a person who is borderline at FPL could enroll — for example, a single taxpayer who earns $11,000 a year could sign up for the exchange saying anticipated income for the next year is $12,000.

      No one can see the future, so I think the legal consideration would be whether your estimated income for the coming year was reasonably possible.

      • Thanks for the explanation. Well, this certainly isn’t the first time being honest has led to the short end of the stick. Two reasons I didn’t want to go on Medicaid were I have an HSA I want to continue contributing to and I’m not indigent. So while technically I was eligible, I have ethical concerns going that route. I wasn’t even referred to Medicaid. I looked at and bypassed the form, just went straight to an exchange policy.

        I didn’t think about being overly optimistic about my 2014 income expectations. Too bad my insurance broker couldn’t fill in some of those finer details when we met. So you are right, I am not eligible for a PTC. Do you know if it’s possible to make an adjustment for 2015 and file for an APTC?

        In any case, H&R Block cannot even handle my relatively simple 10956-A, where there are no PTCs. So I will either just print the forms and file or maybe look at an online free file.

        Thanks for the help!

  5. Thanks for this blog. I’ve used HR Block online for over 10 years, but this year they threw me with this self-employed health insurance failure.

    Thanks to this spreadsheet and a few days of quite time, I just went through free fillable forms and did my taxes on my own this year. I have some rental properties and investments, and just thought it was easier to use a paid service.

    Now that I’ve done them on my own I’ve realized that they’re not so complicated, and that HR Block has actually screwed me over the past few years by messing up certain deductions and credits.

    I have some tax exempt interest that is included in my MAGI but not by AGI, which made for a little pain in the butt – basically had to do the iterative calculation twice so that in the end, after the self-employment health insurance deduction, the MAGI figure was exactly higher than my AGI by the tax exempt interest amount. After wrapping my head around that calculation the rest of the taxes were easy…and I saved over $100 in filing costs.


  6. After a slow start, I finally thought TurboTax was working well so I submitted my return on 3/26/15. Received a letter from IRS over the weekend that my 8962 (Premium Tax Credit) was not completed; it was and appears to have been filed along with the rest of the return. Not sure what the problem is. Guess I will get to spend some time on the phone waiting to talk to the IRS. 😦

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