Yes. You can deduct your health insurance premiums and the repayment amount you paid
. The IRS states, any repayment of the Advance Premium Tax Credit is considered to be a premium payment in the same tax year.
How do I report excess advanced PTC?
If you have excess APTC for 2020,
you are not required to report it on your 2020 tax return or file Form 8962, Premium Tax Credit (PTC)
. If you're claiming a net Premium Tax Credit for 2020, you must file Form 8962, Premium Tax Credit (PTC).
Self-employed individuals may be eligible to deduct
up to 100%
of their health insurance premiums on their tax return. You can claim the self-employed health insurance deduction even if you do not itemize deductions.
Medical insurance premiums are deducted from your pre-tax pay
. This means that you are paying for your medical insurance before any of the federal, state, and other taxes are deducted.
Can an S Corp owner take self-employed health insurance deduction?
If the medical insurance paid for by the S corp is properly reported on the shareholder's Form W-2, the greater than 2 percent shareholder should be able to take the self-employed health insurance deduction on their personal return. The S corp can deduct the expenses as wages.
The American Rescue Plan Act of 2021 (ARPA), enacted on March 11, 2021,
suspended the requirement to repay excess advance payments of the premium tax credit
(excess APTC, which is the amount by which your advance credit payments for the year exceed your premium tax credit for the year) for tax year 2020.
For the 2021 tax year,
you must repay the difference between the amount of premium tax credit you received and the amount you were eligible for
. There are also dollar caps on the amount of repayment if your income is below 4 times the poverty level.
For tax year 2020 only,
you don't have to repay the excess APTC amount
. Do not file Form 8962 with your return. The amount that you would have entered on Form 8962, line 29, is the amount of your excess APTC that you are now not required to repay due to the American Rescue Plan Act.
What is excess advance payment of PTC?
An excess APTC is
the amount by which the taxpayer's APTCs exceed his or her Sec. 36B premium tax credit (PTC)
. Eligible taxpayers may claim a PTC for health insurance coverage in a qualified health plan purchased through a health insurance marketplace.
Another way to avoid having to repay all or part of your premium assistance is to
elect to have all or part of your premium assistance sent to you as a tax refund when you file your tax return
, instead of paid in advance to your health insurer during the year.
What happens if I don't file Form 8962?
In general, it is very important to file your federal tax return with Form 8962 for any year you received an advanced premium tax credit. If you don't file Form 8962,
the IRS will call this a failure to reconcile, and you could be prevented from applying for Marketplace premium tax credits in the future
.
Self-employed people may deduct their health insurance premiums from their income
, as opposed to claiming them as a medical expense, and can offset the costs of their premiums with their return.
You may be eligible to claim the self-employed health insurance even if you don't itemize deductions
. This is an “above-the-line” deduction. It reduces income before you calculate adjusted gross income (AGI). However, this deduction cannot reduce your Social Security and Medicare tax.
You can only deduct qualifying medical expenses that exceeded 7.5 percent of your adjusted gross income last year
.
If you paid your premiums with pre-tax dollars, you don't qualify for this credit since you already received a tax break when your employer deducted your premium from your paycheck.
The pre-tax option allows you to receive the full tax benefit because all of your premiums are tax-free
.
The premiums paid by the business can be deducted on your Form 1040 (line 29) and as a business expense on Form 1120S
.
What deductions can an S-corp take?
- Going into Business Expenses. The costs of getting a business started are capital expenses, which must be deducted over the first five years you are in business.
- Auto Expenses. …
- Professional Fees. …
- Bad Debts. …
- Business Entertaining. …
- Travel. …
- Advertising and Promotion. …
- Education Expenses.
For the 2021 and 2022 tax years, The American Rescue Plan expanded eligibility for premium tax credits to people at all income levels.
If your income for 2022 turns out to be greater than the amount you estimated when you sign up, you may have to repay some or all of the excess credit.
A single individual with income between $25,520 and $38,280 would have to repay
no more than $800
if they received too much federal premium tax credit, and $775 if they received too much of the state subsidy.
The law extends eligibility to taxpayers with household income above 400 percent of the federal poverty line by lowering the upper premium contribution limit to
8.5 percent of household income
. All household income levels will experience a boost in premium credits for 2021 and 2022.
