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Tax Software and ACA Calculations
Old 11-26-2014, 12:06 PM   #1
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Tax Software and ACA Calculations

I'm not sure when it came out, but I see that H&R Block 2014 tax software is downloadable now.

Has anyone run through it? Does it handle the ACA subsidy balancing well? (or at all)? How about the ACA penalty calculation...is that in there?

I plan to run some "what-if" calculations and only then decide how much tIRA to Roth to convert, but that depends on the ACA calculations being in there.
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Old 11-26-2014, 08:22 PM   #2
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I'll answer my own question...."NO".
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Old 11-27-2014, 05:17 AM   #3
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Originally Posted by sengsational View Post
I'll answer my own question...."NO".
The answer should be "not yet." The screenshot says it will be an update scheduled for January 8, 2015, not that it doesn't handle the issue at all. It's not the software's fault if the IRS hasn't finalized the form yet when the software was published.
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Old 11-27-2014, 06:29 PM   #4
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The answer should be "not yet." The screenshot says it will be an update scheduled for January 8, 2015, not that it doesn't handle the issue at all. It's not the software's fault if the IRS hasn't finalized the form yet when the software was published.
Thanks for the response. What you say is all true. I was arriving at this with little information (didn't know how far the IRS had gotten, didn't know how far Block had gotten). The answer I wanted to hear was "yes, it's in the software and it works". Since nobody answered, I bought the software, installed it, and became "not so happy" that it didn't do what I wanted. The only thing that Block did was not make it obvious that the software wasn't baked yet (due to the IRS). But they wouldn't do that then, would they, or they wouldn't see the revenue.

The fact that it's not ready until AFTER December 31 means I won't be able to do a precise "pro-forma" tax return, which is disappointing because I'd like to fine-tune the Roth conversion and PPACA subsidy.
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Old 11-28-2014, 07:43 AM   #5
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I'm guessing that you could probably build a spreadsheet that could do the calculations since you only have to deal with your situation. You could build it using 2013 tax brackets and deductions, exemptions, etc and test that you have a good model by comparison to 2013 TT and then add a column with 2014 tax brackets, deductions, etc. and add an ACA calculation and test the validity of that via the various subsidy calculation tools out there.
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Old 11-28-2014, 12:08 PM   #6
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I played with Form 8962 from Internal Revenue Service. Not having the 1095-A from my insurance company or the Marketplace or whoever is going to issue it, I just used our monthly insurance billing statement. The most important thing that I learned is that if your MAGI is smaller than you had predicted for 2014 you will get back additional subsidy money only up to the amount of your premiums.

So the reconciliation balance credited back to you is the smaller of your total years insurance premiums or the difference in your increased subsidy amount.

I did this guesstimate using FreeTaxUSA® FREE Tax Filing, Online Return Preparation, E-file Income Taxes and I filled out an entire tax return. Our MAGI is smaller than our 2014 prediction because we had an HSA and have contributed the full amount for the year. Our MAGI is smaller, therefore our %of FPL has dropped and from there our expected annual Contribution to Health Care is a smaller percentage of income. Our subsidy should have been higher, but we will be refunded only up to the additional amount that we actually paid in premiums.

Here is Form 8962 -
http://www.irs.gov/pub/irs-dft/f8962--dft.pdf

If you don't want to fill out a guesstimate tax return you can just use the charts in the 8962 instructions -
http://www.irs.gov/pub/irs-dft/i8962--dft.pdf

Yes, it's a DRAFT version, but you get the idea.
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Old 11-28-2014, 12:44 PM   #7
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Originally Posted by pb4uski View Post
I'm guessing that you could probably build a spreadsheet that could do the calculations since you only have to deal with your situation. You could build it using 2013 tax brackets and deductions, exemptions, etc and test that you have a good model by comparison to 2013 TT and then add a column with 2014 tax brackets, deductions, etc. and add an ACA calculation and test the validity of that via the various subsidy calculation tools out there.
Well, I could do that, for sure.

Recently someone asked me "how carefully do you analyze your financial moves", and I answered "in the 95th percentile". That spreadsheet would move me to the 98th!
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Old 11-28-2014, 01:11 PM   #8
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.....The most important thing that I learned is that if your MAGI is smaller than you had predicted for 2014 you will get back additional subsidy money only up to the amount of your premiums.

So the reconciliation balance credited back to you is the smaller of your total years insurance premiums or the difference in your increased subsidy amount....
Did you actually expect that your subsidies would exceed your premiums and you could make a profit on buying health insurance? For god's sake, don't give those politicians in Washington any ideas.
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Old 11-28-2014, 01:40 PM   #9
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Originally Posted by thefinancebuff View Post
The answer should be "not yet." The screenshot says it will be an update scheduled for January 8, 2015, not that it doesn't handle the issue at all. It's not the software's fault if the IRS hasn't finalized the form yet when the software was published.
I'd assume that TurboTax won't be far behind (?)
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Old 11-28-2014, 02:19 PM   #10
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Did you actually expect that your subsidies would exceed your premiums and you could make a profit on buying health insurance? For god's sake, don't give those politicians in Washington any ideas.
Ha! Wouldn't that be a clever by-product of "you'll know what's in this bill after you pass it."

There are "refundable" tax credits that do provide a refund beyond what you paid in(child tax credit, etc.) but this isn't one of them.

I was just pointing out where and how that limit is calculated.
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Going from 4 to 3
Old 11-28-2014, 06:21 PM   #11
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Going from 4 to 3

Quote:
Originally Posted by Sue J View Post
I played with Form 8962 from Internal Revenue Service.
...
...
Thanks for those links. I played with the form now too. My situation is a little weird, though, since I dropped DD1 when she got hired at the megacorp.

I forgot what a pain it is to do this stuff without the help of software!

The top of the 8962 form has me put "3" exemptions, but the year started out with "4"! Since the FPL is determined from that number, I think I'm going to get the short end of the stick on this deal? That's if I need to put the "monthly contribution for healthcare (8b)" into all 12 months under "C" in the table. The smaller line 8b, the better, since that is the number that's subtracted from the second lowest silver cost to determine the maximum premium assistance.
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Old 11-29-2014, 09:22 AM   #12
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Since I had an adult child (age 26 or younger) who was enrolled in my Marketplace health plan for about 4 months, but is not going to be a dependent on my tax return, I think I might need to allocate premiums between two different tax returns. The interview at FreeTaxUSA does seem to cover this!

EDIT:

A couple of problems...

I have had to guess at the contents of the 1095-A (the form that will be supplied by the insurance company). There may even be "2 policies" (one that had 4 of us, and another that had 3), so maybe two 1095-A's. The other problem is that I really don't know how to calculate the "Shared Policy Allocation" percentages (Premium Percentage, SLCSP Percentage, Advance Payment of PTC Percentage).

Very simple situation: daughter gets hired and I drop her from our policy. Result: mass confusion!
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Old 11-30-2014, 06:32 PM   #13
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Has anyone found an early copy of pub 947?
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Spreadsheet for form 8962
Old 12-03-2014, 11:37 AM   #14
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Spreadsheet for form 8962

I made a spreadsheet that was intended to model form 8962 (notice how I worded that). Parts 4 and 5 are not modeled, so if someone feels so inclined...
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File Type: xls PremiumTaxCredit8962.xls (61.0 KB, 5 views)
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Old 12-03-2014, 11:55 AM   #15
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Here's a discussion of the challenges for doing your taxes this year with the ACA forms:
Tax Filing And The ACA: Helping Americans Meet The Challenge – Health Affairs Blog
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Old 12-03-2014, 12:11 PM   #16
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Originally Posted by sengsational View Post
Here's a discussion of the challenges for doing your taxes this year with the ACA forms:
Tax Filing And The ACA: Helping Americans Meet The Challenge – Health Affairs Blog
Nice link, thanks. One snippet from the article
Quote:
Tax filers who fail to reconcile their tax credits for 2014 cannot claim tax credits for subsequent years.
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Old 12-04-2014, 04:13 AM   #17
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Nice link, thanks. One snippet from the article
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Tax filers who fail to reconcile their tax credits for 2014 cannot claim tax credits for subsequent years.
Locked out "forever"! Or who knows, maybe they're going to add more complexity by allowing people to file historical years to get back in the game.
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Old 12-04-2014, 01:11 PM   #18
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I used taxact, I underestimated, but software says amount I owe is capped to encourage people to apply for subsides, which is nice :-)
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Old 12-05-2014, 09:22 PM   #19
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That is a nice rule.

I wonder why the web-based tax apps have the ACA calculations working, but TT and Block are not doing that calc until January.

I'm done now...did my proforma in Excel with the help of Block, reading the forms/instructions and called in my Roth conversion.
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Old 12-05-2014, 09:27 PM   #20
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That is a nice rule.

I wonder why the web-based tax apps have the ACA calculations working, but TT and Block are not doing that calc until January.

I'm done now...did my proforma in Excel with the help of Block, reading the forms/instructions and called in my Roth conversion.
As pointed out above the issue is that the exact forms are not yet released by the IRS so the return can't be filed. Since the first real deadline is Jan 31 for filine taxes and it will likley be extened since the tax extenders bill will affect taxes I suspect the IRS won't start processing returns until the middle of Feb at the earliest.
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