(…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 Healthcare.gov 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.