Self insured ACA subsidy calculation.

[theneweddie]

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.

http://www.irs.gov/pub/irs-drop/rp-14-41.pdf

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?

 

[M Paquette]

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.

 

[pb4uski]

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.

 

[Animorph]

You can have Excel iterate to the solution for you.