This is the message that shows up in HR Block Software after the most recent (March 26) update.
This message shows up EVEN IF the taxpayer is NOT entitled to ANY tax credit. In my case, because of unanticipated non-earned income during 2014 (a capital gain from sale of assets) my income is too high to qualify for the tax credit, and I will have to pay the full clawback amount.
The IRS Publication 954- Premium Tax Credit — is finally available. Information about calculating the self employment health insurance deduction, including worksheets, can be found on pages 21-37. This includes detailed instructions for complex situations, so it is worthwhile to read. The worksheets can also be used to double check results from tax software.
I will be taking some time to review this document and plan to summarize important points in forthcoming posts.
The starting point of determining your household income for purpose of the ACA tax credit is your adjusted gross income AGI). As explained in my previous post (Part One), your household income is the combination of the AGI of the primary taxpayer and any other family members with incomes large enough to trigger tax liability, together with any tax-exempt income from interest, social security, or foreign earnings.
AGI is defined in Internal Revenue Code section 62. It is the amount remaining after subtracting various specified deductions from your gross income (or the total of all taxable forms of income). Because these various deductions can potentially reduce your income by thousand of dollars, it means that you or your family may be eligible for the premium assistance tax credit even if you have total income well above the 400% federal poverty level.
Here are some of the most common deductions enumerated in Section 62 which may effectively reduce income. Many individuals or families whose household incomes fall above the 400% FPL subsidy limits may find that they can effectively reduce their AGI and qualify for significant credits toward their insurance by simply taking advantage of deductions they may not have fully utilized in the past.