ACA advance premium credit repayment -- claim of right?

[appelman]

No it's not. The loan is from the US government. Unlike the dentist, the health insurance company is paid in FULL each month (partially by you and partially by the US Government).

Still, the idea that it is a "loan" is your construct. Nobody officially calls it such. The SEHI situation appears to be an exception to general accounting rules, based on Rev. Proc. 2014-41. It is not clear that such an exception exists for claiming the premium as a Schedule A medical expense.

[TaxGuyBill]

It may not officially be called a loan, but that is what it is.

It is only an Advance payment. You do not officially qualify for the Premium Tax Credit until the end of the year when you income is determined. If you do not qualify for it, you need to repay it. From my viewpoint, that is a loan.

Again, the insurance company is paid in FULL during the year, so it is deductible.


Obviously this isn't anything official, but my software (ProSeries) does it as I describe. It takes the TOTAL cost of insurance, and subtracts the 'final' Premium Tax Credit and automatically puts it on Schedule A. In other words, any repayment or additional credit is accounted for on the 2014 tax return.

[Burke]

Again, the insurance company is paid in FULL during the year, so it is deductible.

Obviously this isn't anything official, but my software (ProSeries) does it as I describe. It takes the TOTAL cost of insurance, and subtracts the 'final' Premium Tax Credit and automatically puts it on Schedule A. In other words, any repayment or additional credit is accounted for on the 2014 tax return.

I had a client in 2014 to whom this happened. He had to repay the entire credit. (Actually, it mostly reduced his refund as he had paid in quite a bit, and it was almost all covered.) For this reason the total cost of the insurance premiums went on the Sche A. But it wasn't accounted for in the software, I had to enter it.

[appelman]

I think I'd call it a subsidy, rather than a loan. Then only if it turns out you're not entitled to it do you have to pay it back. But that still leaves the question of when to claim the repayment.

[Rapid Robert]

In recent tax update CE I took, this issue was addressed. Two points were made by the CE provider:

1) Lacerte and ProSeries handle the Schedule A situation differently (from each other). Contacting the vendor (Intuit) provided no clue as to why.

2) There is no guidance from the IRS, other than the amount equal to the credit is not deductible. On the one hand, you could treat the taxpayer as cash basis only, and report it that way; on the other hand, why did IRS make SEHI calculation so complicated? -- probably because the intention was to have it all resolved in a single tax year, so use the same approach to Schedule A.

I think there are other factors that could make this more complicated, e.g. what if the repayment is limited to less than the full difference between Advance PTC and actual PTC?