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Self insured ACA subsidy calculation.
Old 12-20-2014, 02:30 PM   #1
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Self insured ACA subsidy calculation.

The IRS apparently noticed that the calculation of MAGI for purposes of the subsidy included deductions of health insurance premiums which were in turn affected by the subsidy - creating a circular definition. Their solution was to create an iterative process to "home in" on the correct amount.

Since this appeared complicated, I called TurboTax and was informed they had implemented the calculation. I purchased it and then dummied in some reasonable numbers to see how it worked.

The first time through it popped up a 'calculating' box before crashing to desktop.

The second time it simply said I owed a lot more taxes and did not carry any amount to the line for self employed premium deductions on the 1040.

So basically it's not working yet.

Does anyone know of a resource that will let me ballpark the deduction amount without doing to by hand?

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Old 12-20-2014, 03:13 PM   #2
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I'll be damned. An iterative convergence algorithm, including end point determination, written in the tax code.

I suspect we'll need to move to a formally specified, Turing complete language to implement formal, provably correct regulations and laws in the near future.

Does anyone know of a resource that will let me ballpark the deduction amount without doing to by hand?
Unfortunately, no. Intuit is probably going to have to hand-roll a solver for this one. Doing it by hand would probably converge in just a few iterations, but that would require a detailed knowledge of the English-like legal language and referents the IRS runs, which most of us humans don't have.

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Old 12-20-2014, 04:42 PM   #3
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The simple solution would be to make it deductible on Schedule A like it is for taxpayers who are not self employed but that would probably require a statutory change. If they had read it before they passed it then we might not have this mess.
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Old 12-20-2014, 06:09 PM   #4
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You can have Excel iterate to the solution for you.
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