Tax Software and ACA Calculations

[sengsational]

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.

 

[sengsational]

I'll answer my own question...."NO".

 

[thefinancebuff]

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.

 

[sengsational]

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.

 

[pb4uski]

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.

 

[Sue J]

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.

 

[sengsational]

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!

 

[pb4uski]

.....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.

 

[marko]

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 (?)

 

[Sue J]

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.

 

[sengsational]

Going from 4 to 3

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.

 

[sengsational]

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!

 

[sengsational]

Has anyone found an early copy of pub 947?

 

[sengsational]

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...

 

[sengsational]

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

 

[MichaelB]

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

Tax filers who fail to reconcile their tax credits for 2014 cannot claim tax credits for subsequent years.

 

[sengsational]

Nice link, thanks. One snippet from the article

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.

 

[teejayevans]

I used taxact, I underestimated, but software says amount I owe is capped to encourage people to apply for subsides, which is nice

 

[sengsational]

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.

 

[meierlde]

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.

 

[sengsational]

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.

They could allow the calculations to proceed, and still prevent filing. That is what the online services are doing.

I realize that the forms are not final and that the IRS won't be doing anything until next year, but that does not mean that there is no value in doing a proforma before year end, when it's not too late to take various actions to fine tune taxable transactions.

Personally, I think its close to criminal the way this works...we are kept in the dark about the rules we will be taxed on, and only get "final" rules in January. If it were fair, they'd have to settle on the rules for 2015 taxes before 2014 ended!

 

[sengsational]

Today I got an update for H&R Block 2014 tax software.

I was looking forward to it because before it had been preventing my return from getting filed

Since you have more than one Form 1095-A, you'll need to get our next update to complete your return.

Well, today's update didn't help...still says the same thing

 

[wolf]

OP:

Purchased H&R block, Deluxe, Fed & State, Disk. Installed, ran update.
ACA is included.

A little venting:

Here in CA, ACA is called Covered CA. Received 2 1095's, since wife terminated coverage in July, while 2 children stayed on till end of 2014.

Result. One 1095 had mistakes. in credits , etc. mess.

Last week, received post card from Covered CA, saying they sent
us a 1095 with errors, and will send corrected one out a few
weeks.

Past experience with ACA, Covered CA, takes months for them
to get errors corrected.

In any case, while waiting for corrected 1095A's, I filled out form 8962.
Have to pay IRS back some money, according to 2014 income, my subsidy was to much.

Will wait to April to file. Hopefully by then I will receive correct 1095A.
Also, hope they correct and not make more errors. (past experience).

If I don't receive corrections by then, will follow original plan, and send IRS
letter of explanation. (want to avoid issues, 1095A will not match form 8962 entries).

 

[jebmke]

Why not file an extension, enjoy the summer and wait for corrected forms?

 

[sengsational]

Purchased H&R block, Deluxe, Fed & State, Disk. Installed, ran update.
ACA is included.

ACA is included in mine too! The problem is that when there are two legit 1095-A's associated with your return, you get the message "Since you have more than one Form 1095-A, you'll need to get our next update to complete your return."

Now I notice too that when I open the program, I see that I need to wait (at least) a month before any chance of them getting this fixed.

Why not file an extension, enjoy the summer and wait for corrected forms?

A few reasons. First, they owe me money. Second, it would take some "play" out of the financial aid award; they like it if you've already filed your taxes, and don't use estimates. Third, I'd like to just put this behind me. Fourth, reduce the chore. By that I mean I worked my taxes before the end of the year to tune my tIRA to Roth number, ran the numbers in this year's program in January, and so it's all in the front of my mind. If I let that data "page out", then it will be more of a chore to re-do everything at some later date, after I've forgotten it all again.

But alas, I probably don't have any choice, at least before March 12.