How to Treat Marketplace Premium Payments at Tax Time?

[easysurfer]

Okay, so 2016 is the first year I'll have my health insurance through the marketplace at Healthcare.gov.

But I'm scratching my head as to how to treat the marketplace premium payments at tax time.

I chose to not estimate my income for premium tax credits during the year. In other words, with 2016 tax filing is when I'll find out what credit, if any, I'll receive.

But back to the premium payments. My first premium was paid in the end of 2015 to start the marketplace policy for 2016. Is that, first premium counted as part premiums paid in 2015? I'd think so as that was paid in 2015 despite for a 2016 policy. Furthermore, for deduction purposes, would I use the full amount (since I have no idea what premium credit I'd get, if any until tax year 2016).

Maybe someone who has a similar situation to me (but a year prior) can share as I still scratch my head .

Thanks.


Updated: Posted a question at Turbotax Q&A area and they said to put in full amounts as deduction (1st payment for 2015 tax year), then when 2016 tax filing comes, TT will figure things out during premium credit calculation time.

 

[rbmrtn]

But back to the premium payments. My first premium was paid in the end of 2015 to start the marketplace policy for 2016. Is that, first premium counted as part premiums paid in 2015? I'd think so as that was paid in 2015 despite for a 2016 policy. Furthermore, for deduction purposes, would I use the full amount (since I have no idea what premium credit I'd get, if any until tax year 2016).

The premium you paid is for the January 2016 coverage so it goes on your 2016 return. This is reported on the 1095-A form you will get. The credits are calculated on form 8962. Your tax software will do all this. That is the way mine has worked ( I did take the advance for the PTC )

 

[bingybear]

The premium you paid is for the January 2016 coverage so it goes on your 2016 return. This is reported on the 1095-A form you will get. The credits are calculated on form 8962. Your tax software will do all this. That is the way mine has worked ( I did take the advance for the PTC )

are you sure that january premium paid in 2015 would be used on the 2016 return for itemized deductions? It would be used on the 2016 for PTC.

I'm just wondering for deduction why it would have different handling than other medical deductions?

Expenses must have been paid in the taxable year.

from here

 

[easysurfer]

According to the answer of the question I asked in Turbotax Q & A, the 1st payment (in 2015) is itemized in the year paid regardless (can't cut/paste so included as a clipped screen. Should read "calculations done", not "calculations down"):

 

[scrabbler1]

I agree with bingybear. Form 1095-A is used to determine the PTC, not the itemized deduction. The makers of Form 1095-A don't know which year you paid the premiums, only which year they got applied to. I used that difference to "bunch" my premium payments so I could maximize my medical expense deduction in alternating years while taking the standard deduction in the off-years.


I have been tangling with how to handle the PTC, too. I did not take an Advanced Premium Tax Credit (APTC) in 2014 so I earned the entire credit in 2015 when I completed my 2015 tax return. I then counted that credit as a negative expense, reducing the medical expense amount I entered on Schedule A of my 2015 tax return. What isn't totally clear to me is if I should have reduced my 2014 medical expense deduction by the amount of the credit I didn't receive or claim until the 2015 year. I didn't do that, so I am claiming the credit as a negative expense on my 2015 return because it is 2015 when I actually received the premium credit.


For 2016, I began receiving my subsidy as an APTC now instead of paying the full premium every month. I suppose this will add some more complexity to my 2016 return because I also have the tax credit from my 2015 return also occurring in 2016. I'll figure it out next year.

 

[bingybear]

I have not had to deal with PTC yet... 2016 will have a couple months and 2017 will be the whole year.
I know you have to reduce you healthcare expenses by the PTC amount, but I bet they assume all is in the same year. Not sure how that would work if you pay health insurance every other year.
I'll have to play with my tax program to see what it would do in that case. I think it would likely just tell me I can't itemize... which I likely can't do anyway without bunching up my deductions.