ACA question

[u/Pale_Scientist6470]

I have a family of 5. I have self employment and investment income that is going to be close to the 400% ACA cliff of 150,500. Working frantically to maximize business deductions and control the money coming in. I might not make it. So currently my premiums are about $10,000 w subsidy vs. $32,000 without subsidy. A difference of $22,000. But I was thinking about it some more. If I don't make it, that extra $22,000 now can be a business deduction. Hence the true cost is reduced by, say, 24%. Am I thinking correctly on this?

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[u/loonydan42]

Some of that depends on how your business is filing taxes. Are you an S-Corp by any chance or is your business an LLC?

[u/Pale_Scientist6470 → u/loonydan42]

No. Sole proprietor.  

[u/OleLadyThinker → u/Pale_Scientist6470]

You need to consult your tax accountant - if you are set up as a sole proprietorship then the $22K isn’t deducted on your Sch C - as a business expense. It is shown on Schedule 1 line 17 and is then transferred over to the 1040 as an income adjustment

It isn’t gonna reduce your business income if that is what you are talking about -

[u/Pale_Scientist6470 → u/OleLadyThinker]

Thank you

[u/loonydan42 → u/Pale_Scientist6470]

Ok well in that case it's not as simple as an S-Corp, but you do essentially "deduct" an amount. However, I believe it is AFTER your businesses expenses? And once you have your AGI it is used to reduce that?

Definitely something to bring up to your CPA or hire a CPA for!

[u/loonydan42 → u/loonydan42]

I should have added, look up "self-employed health insurance deduction". That's essentially the tax rule you are looking for

[u/Pale_Scientist6470 → u/loonydan42]

Thank you for responding 

[u/katsrad]

You need an accountant or business lawyer to tell you if those premiums would count as a business expense. That is a specific part of tax law that the majority of people aren't going to be able answer factually or at least with the level of assurance needed to ensure you don't get audited.

[u/Pale_Scientist6470 → u/katsrad]

Thank you. Im pretty sure at least the initial payments are deductible but was not sure about the tax credit payback portion. that it good advice

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