Question

Incorrect calcualtion of PTC & SEHID

Forum|Forum|1 year ago
March 15, 2025
1 reply
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2024 TT Home & Business Desktop (updated to most current version) is not calculating the proper premium tax credit (Form 8962) together with the Self-Employed Health Insurance Adjustment from a K-1 linked to Form 1095-A. This is an iterative calculation, since the SEHI adjustment affects the AGI and the AGI affects the PTC and the PTC affects the SEHI adjustment. I can see the software doing the iterations at the bottom of Form 7206 and as it converges closer to the final result, it does one more iteration and goes way off the rails, shortchanging me by over $2,800!

TurboTax Home & Biz Windows

A

AmeliesUncle

When the Iterative calculation does not end up being 'even', it uses the Alternative calculation, which often ends up as some missing credit and/or deduction.

I haven't checked in a few years so maybe they fixed it, but TurboTax also messes up the calculation if the Iterative calculation fluctuates between certain thresholds, especially the 400% threshold (but can also happen at the 200% and 300%).

Here are a couple of options that I can think of:

(1) Add a contribution to a Traditional IRA. That will usually save tax AND increase your credit, and may be enough to get it back to the Iterative calculation rather than the alternative calculation (or get it away from the x00% threshold).

(2) Manually calculate it. Then don't like the 1095-A to the business and enter manually calculated Self Employed Health Insurance deduction in the health insurance spot on the K-1 (as if it was not Marketplace insurance).

R

RightfieldAuthor

Thanks for your reply, however TT needs to fix this. The AGI/FPL ratio is always >400% during the iterations, so that's not a contributing factor. I have a spreadsheet where I do the iterations manually, by adjusting the SEHID and re-calculating the AGI & PTC and it converges nicely.

A

AmeliesUncle

Unfortunately, TurboTax is extremely unlikely to fix it. This calculation has been around for 11 years and they have never expressed any interest in changing it and have even vehemently claimed there is no problem.

Unless it converges to under $1 change, it doesn't fit the criteria for the Iterative calculation and it would use the alternative calculation. And although 400% is the most common problem, in certain scenarios 100%, 200% or 300% can also cause problems.

If you have a spreadsheet, then as I suggested before, just unlink the 1095-A from the business and enter the health insurance cost where K-1 asks for non-Marketplace insurance. That should result in the proper numbers.