BulldogTom Posted January 12, 2015 Report Share Posted January 12, 2015 Looking for some materials to help with this scenario: TP is single, no dependents and self employed. His Schedule C business is on the Cash basis of accounting. Goes to the exchange and gets insurance which is subsidized. Has a better year than expected. Will have to pay back some of the advanced premium tax credit. How much do I include for self insured health deduction? The amount he paid in, or the amount he will ultimately pay when the subsidy is reconciled? If it is only the amount he paid in 2014, will he get to deduct the remainder next year since he paid for it in 2015? I looked through my materials and did not see this situation addressed specifically? I think I heard something about it in a seminar, but I can't track down a definative cite. Can someone push me in the right direction? Was hoping there would be a worksheet or something in the software that might help, but not finding that either. Thanks Tom Newark, CA Quote Link to comment Share on other sites More sharing options...
jklcpa Posted January 12, 2015 Report Share Posted January 12, 2015 Tom, try Rev Proc 2014-41. The answer as to how to calculate the exact SEHI amount is in section 5. I don't know if the answer to your question, what happens to the rest of it, is in this rev proc; I didn't have time to read all of it. If others are not yet aware, one of the problems in determining the SEHI is that it is a circular formula when the PTC is involved with each amount affecting the other, and this rev proc has the formula to calculate the SEHI. I got to that through the IRS site, so if you or anyone want to use those to save time finding this rev proc, here they are: Rev Proc 2014-41 and IRS page that the above link came from. Hope this helps. Quote Link to comment Share on other sites More sharing options...
jklcpa Posted January 12, 2015 Report Share Posted January 12, 2015 Great question, by the way! Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted January 12, 2015 Author Report Share Posted January 12, 2015 OK, here is what I came up with. TP determines gross income from business. This amount is the first limit on SE HI deduction (nothing new here, this is how we always did this). TP determines the amount he paid PLUS the amount of credit he has to pay back subject to the clawback limitations. This was a really good article on this issue. https://obamacareguide.wordpress.com/2014/07/25/self-employed-health-insurance-deduction-the-iterative-calculation/ Tom Newark, CA 1 Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted January 12, 2015 Author Report Share Posted January 12, 2015 Great question, by the way! Thanks for pointing me in the right directions Tom Newark, CA Quote Link to comment Share on other sites More sharing options...
easytax Posted January 13, 2015 Report Share Posted January 13, 2015 (edited) Tom, Would you like to make an excel sheet for those computations (from your article posting) --- maybe you could sell it and retire from the actual tax prep side? However remember me with a no-cost copy ; since you can retire on a suggested idea. Have a GREAT Season --- it will be fun --- especially if you have a lot like this scenario. Edited January 13, 2015 by easytax Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted January 16, 2015 Author Report Share Posted January 16, 2015 This is crazy, my first client of the year, drops off his bookkeeping for me to do. I started working on the tax return right after I finished his bookkeeping. Asked him 3 simple questions just to get a better estimate of his tax due/refund. One of which was if he had health insurance this year and where did he get it. This was not a client I thought would be on the exchange. But there he is. Let me know right away that I can make no assumptions about my clients this year. Tom Newark, CA 1 Quote Link to comment Share on other sites More sharing options...
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