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IRS.gov Website
Publication 974
taxmap/pubs/p974-010.htm#en_us_publink100020667

Self-Employed Health Insurance Deduction and PTC(p56)

rule
This part provides special instructions for figuring the self-employed health insurance deduction and PTC if you or your spouse was self-employed, you or a member of your tax family was enrolled in a qualified health plan in 2018, and you may be eligible for the PTC. Because the amount of the self-employed health insurance deduction may affect the amount of the PTC, and the amount of the PTC may affect the amount of the deduction, a taxpayer who may be eligible for both may have difficulty determining the amounts of those items. A taxpayer who may be eligible for both may follow the instructions in this part to determine amounts of the self-employed health insurance deduction and PTC that are allowable under the law.
EIC
Using the special instructions in this part is optional. If you are eligible for both a self-employed health insurance deduction and the PTC for the same premiums, you may use any computation method that results in reporting amounts that satisfy the rules for both the deduction and PTC, as long as the sum of the deduction claimed for the premiums and the PTC computed, taking the deduction into account, is less than or equal to the enrollment premiums.
Before you complete any of the worksheets in this part, you should first do the following.
If you meet the requirements described above, do the following.
Using this information, do the following.
  1. If you have health insurance premiums for which you cannot claim the PTC (see Nonspecified premiums, later), first complete Worksheet P, or if required, Worksheet 6-A in chapter 6 of Pub. 535 but only with respect to those premiums. Skip Worksheets W and X if either of the following applies.
    1. You completed Worksheet P and line 2 is less than or equal to line 1.
    2. You completed Worksheet 6-A in chapter 6 of Pub. 535 and line 13 is equal to or less than line 3.
  2. Then complete Worksheet W and Worksheet X. You have to complete Worksheet X only if APTC was paid to your insurer on your behalf for the months you were self-employed. If APTC was not paid to your insurer on your behalf for the months you were self-employed, skip Worksheet X.
  3. After completing Worksheets W and X, you may choose to use either the Simplified Calculation Method or the Iterative Calculation Method to compute your self-employed health insurance deduction and PTC. The Simplified Calculation Method is shorter, but in some cases will not produce a result as favorable as the Iterative Calculation Method.
taxmap/pubs/p974-010.htm#en_us_publink100029576
PencilWorksheet P. Self-Employed Health Insurance Deduction for Nonspecified Premiums
Before you begin: ✓ If you file Form 8885, read the definition of nonspecified premiums to find out which amounts you cannot include on line 1 of this worksheet.
✓ Read Exceptions, later, to see if you can use this worksheet instead of Pub. 535 to figure your deduction for nonspecified premiums. Also read the definitions of specified premiums and nonspecified premiums.
1. Enter the total amount of nonspecified premiums paid in 2018 for health insurance coverage established under your business (or the S corporation in which you were a more-than-2% shareholder) for 2018 for you, your spouse, and your dependents. Your insurance also can cover your child who was under age 27 at the end of 2018, even if the child was not your dependent. But do not include amounts for any month you were eligible to participate in an employer-sponsored health plan or amounts paid from retirement plan distributions that were nontaxable because you are a retired public safety officer 1. 
2. Enter your net profit* and any other earned income** from the business under which the insurance plan is established, minus any deductions on lines 27 and 28 of Schedule 1 (Form 1040), or Form 1040NR. Do not include Conservation Reserve Program payments exempt from self-employment tax 2. 
3. Self-employed health insurance deduction for nonspecified premiums. Enter the smaller of line 1 or line 2. Do not include this amount in figuring any medical expense deduction on Schedule A (Form 1040) 3. 
  
  • If line 2 is equal to or less than line 1, stop here. Do not read the rest of these special instructions. Enter this amount on line 29 of Schedule 1 (Form 1040) or Form 1040NR. Use Form 8962 to figure the premium tax credit for specified premiums.
  • If line 2 is more than line 1, complete Worksheet W. Also complete Worksheet X if APTC was paid to your insurer on your behalf for the months you were self-employed. If APTC was not paid to your insurer on your behalf for the months you were self-employed, skip Worksheet X.
   


*If you used either optional method to figure your net earnings from self-employment, do not enter your net profit. Instead, enter the amount from Schedule SE, Section B, line 4b.

**Earned income includes net earnings and gains from the sale, transfer, or licensing of property you created. However, it does not include capital gain income. If you were a more-than-2% shareholder in the S corporation under which the insurance plan is established, earned income is your Medicare wages (box 5 of Form W-2) from that corporation.
taxmap/pubs/p974-010.htm#en_us_publink100037482

Instructions for Worksheet P(p57)

rule
Use Worksheet P to figure the amount you can deduct for nonspecified premiums.
taxmap/pubs/p974-010.htm#en_us_publink100037483

Exceptions.(p57)

rule
Use Worksheet 6-A in chapter 6 of Pub. 535 instead of Worksheet P to figure your deduction for nonspecified premiums if any of the following applies. (Only include nonspecified premiums on line 1 or 2 of Worksheet 6-A.)
After you complete Worksheet 6-A, follow the instructions below.
taxmap/pubs/p974-010.htm#en_us_publink100037484

Nonspecified Premiums(p57)

rule
A nonspecified premium is either of the following.
Calculate how much of these nonspecified premiums are fully deductible by entering this amount on line 1 of Worksheet P, or if required, on line 1 or 2 of Worksheet 6-A in chapter 6 of Pub. 535. Complete the remainder of the appropriate worksheet.
The following are examples of nonspecified premiums.
taxmap/pubs/p974-010.htm#en_us_publink100036351

Example.(p58)

In 2018, you were self-employed and were enrolled in a qualified health plan through the Marketplace. You enrolled your dependent, 22-year-old daughter in individual market coverage not offered through the Marketplace. This coverage has an annual premium of $3,000. This $3,000 premium is a nonspecified premium because it is for coverage under a plan that is not a qualified health plan. Include this $3,000 premium on Worksheet P, line 1, or if required, on line 1 of Worksheet 6-A in chapter 6 of Pub. 535.
taxmap/pubs/p974-010.htm#en_us_publink100074406

Filers of Form 8885.(p58)

rule
If you are filing Form 8885, nonspecified premiums do not include any of the following amounts.
taxmap/pubs/p974-010.htm#en_us_publink100037485

Specified Premiums(p58)

rule
Specified premiums are the premiums for a specified qualified health plan or plans for which you may otherwise claim as a self-employed health insurance deduction on line 29 of Schedule 1 (Form 1040) or Form 1040NR. Generally, these are the premiums paid for the months you were self-employed. If you were self-employed for part of a month, the entire premium for that month is a specified premium. A specified qualified health plan is a qualified health plan that covers one or more members of your coverage family for a month for which your enrollment premium(s) has been paid by the due date prescribed under Enrollment premiums, discussed earlier. Qualified health plan, coverage family, and enrollment premiums are defined earlier under Terms You May Need To Know.
taxmap/pubs/p974-010.htm#en_us_publink100036354

Example.(p58)

You were enrolled in a qualified health plan through the Marketplace for all of 2018 and you were self-employed from September 15 through December 31. Only the premiums for the last 4 months are specified premiums and only those premiums are entered on Worksheet W, line 1, and Worksheet X, line 27, if you are required to complete those worksheets. You are not allowed a self-employed health insurance deduction for the January through August premiums because you were not self-employed during those months. Those premiums are neither specified premiums nor nonspecified premiums. However, you may be allowed a PTC for your coverage for January through August.
taxmap/pubs/p974-010.htm#en_us_publink100041111

Plan covering individuals in another tax family.(p58)

rule
If the plan covers at least one individual in your tax family and one individual in another tax family, you may have to allocate policy amounts between your tax family and the other tax family. See Line 9 in the Form 8962 instructions for instructions on how to allocate policy amounts. Do this allocation before you determine the portion of the specified premiums allocable to your coverage family discussed next.
taxmap/pubs/p974-010.htm#en_us_publink100036261

Plan covering individuals not in your coverage family.(p58)

rule
If the plan covers individuals who are not in your coverage family, use only the portion of the premiums for the specified qualified health plan that is allocable to your coverage family. You determine the specified premiums that are allocable to your coverage family by multiplying the enrollment premiums for the months you were self-employed and the plan covered non-coverage family members by a fraction. The numerator of the fraction is the premium for the applicable second lowest cost silver plan (SLCSP) for your coverage family. The denominator of the fraction is the total of (1) the premium for the applicable SLCSP for your coverage family and (2) the premium for the applicable SLCSP for the individuals who are not in your coverage family.
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Example.(p58)
Gary was self-employed in 2018 and enrolled in a qualified health plan. APTC was paid to his insurer on his behalf. The policy covers Gary, Gary's wife Sue, and Gary’s two dependent daughters. Sue is not in the coverage family because she is eligible to enroll in her employer’s health insurance. The enrollment premium is $15,000. The premium for the applicable SLCSP covering Gary and his two daughters is $12,000 and the premium for the applicable SLCSP covering Sue is $6,000. Gary figures the amount of specified premiums by multiplying the $15,000 enrollment premium by a fraction. The numerator of the fraction is the premium for his applicable SLCSP ($12,000). The denominator of the fraction is the total of the premiums for the applicable SLCSP of both Gary and Sue ($18,000). The result is $10,000 ($15,000 enrollment premium x ($12,000/$18,000)) of specified premiums, which Gary enters on Worksheet W, line 1, and Worksheet X, line 27. The remaining $5,000 of enrollment premium ($15,000 enrollment premium – $10,000 specified premiums) is attributable to Sue's coverage and is a nonspecified premium that Gary enters on Worksheet P, line 1.
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Filers of Form 8885.(p58)

rule
If you are filing Form 8885, specified premiums do not include any of the following amounts.
taxmap/pubs/p974-010.htm#en_us_publink100026764
PencilWorksheet W. Figuring the Limit on the Self-Employed Health Insurance Deduction for Specified Premiums
Caution. If you have more than one trade or business under which a qualified health plan is established, complete lines 4 through 13 separately for each trade or business. Add the amounts on line 13 for all the trades or businesses. Then complete lines 14 through 17 once for all trades or businesses.
1.Enter your specified premiums. See Specified Premiums under Instructions for Worksheet P, earlier 1.
2.Enter the APTC from Form 1095-A, Part III, column C, that is attributable to the premiums on line 12.
3.Subtract line 2 from line 13.
4.Enter your net profit* and any other earned income** from the business under which the qualified health plan is established. Do not include Conservation Reserve Program payments exempt from self-employment tax. If the business is an S corporation, skip to line 11 4.
5.Enter the total of all net profits* from: Schedule C (Form 1040), line 31; Schedule C-EZ (Form 1040), line 3; Schedule F (Form 1040), line 34; or Schedule K-1 (Form 1065), box 14, code A; plus any other income allocable to the profitable businesses. Do not include Conservation Reserve Program payments exempt from self-employment tax. See the Instructions for Schedule SE (Form 1040). Do not include any net losses shown on these schedules 5.
6.Divide line 4 by line 56.
7.Multiply line 27 of Schedule 1 (Form 1040) or Form 1040NR by line 67.
8.Subtract line 7 from line 48.
9.Enter the amount, if any, from line 28 of Schedule 1 (Form 1040) or Form 1040NR, attributable to the same business for which the qualified health plan is established 9.
10.Subtract line 9 from line 810.
11. Enter your Medicare wages (Form W-2, box 5) from an S corporation in which you are a more-than-2% shareholder and in which the qualified health plan is established 11.
12.Enter any amount from Form 2555, line 45, attributable to the amount entered on line 4 or line 11 above, or any amount from Form 2555-EZ, line 18, attributable to the amount entered on line 11 above 12.
 Note. If you are not filing Form 2555 or 2555-EZ, enter -0-.   
13.Subtract line 12 from line 10 or 11, whichever applies 13.
14.Enter your self-employed health insurance deduction for nonspecified premiums from Worksheet P, line 3, or Worksheet 6-A, line 14, in chapter 6 of Pub. 535 14.
15.Subtract line 14 from line 1315.
16.Enter the smaller of line 3 or line 1516.
17.Add lines 14 and 1617.
18.Is line 2 blank or -0-?18.
 
Yes. Skip line 19 and Worksheet X. Use one of the methods that follow Worksheet X to figure the PTC and self-employed health insurance deduction for specified premiums.
No. Go to line 19.
  
19.Subtract line 16 from line 15. Then go to Worksheet X19.

*If you used either optional method to figure your net earnings from self-employment from any business, do not enter your net profit from the business. Instead, enter the amount attributable to that business from Schedule SE, Section B, line 4b.

**Earned income includes net earnings and gains from the sale, transfer, or licensing of property you created. However, it does not include capital gain income.
taxmap/pubs/p974-010.htm#en_us_publink100026762
PencilWorksheet X. Figuring Household Income and the Repayment Limitation
Complete this worksheet only if APTC was paid to your insurer on your behalf for the months you were self-employed.
Part I: Taxpayer's Modified AGI
1.Combine the amounts from:
  • Form 1040, lines 2a, 6, and the excess, if any, of line 5a over line 5b.
  • Form 1040NR, lines 9b and 23
1.
 Note. See instructions if you are filing Form 8582, 8814, or 8815.   
2.Enter any amounts from Form 2555, lines 45 and 50, and Form 2555-EZ, line 182.
3.Add lines 1 and 23.
4.Enter the total of the amounts from:
  • Schedule 1 (Form 1040), lines 23 through 28, 30, and 31a, plus any write-in adjustments you entered on the dotted line next to Schedule 1 (Form 1040), line 36, other than any amounts identified as "DPAD."
  • Form 1040NR, lines 24 through 28, 30, and 31, plus any write-in adjustments you entered on the dotted line next to line 34, other than any amounts identified as "DPAD"
4.
 Note. See instructions if you made contributions to a traditional IRA.  
5.Enter the amount from Worksheet W, line 14 5.
6.Enter the amount from Worksheet W, line 16 6.
7.Add lines 4, 5, and 67.
8.Subtract line 7 from line 3. Then go to Part II if you are claiming dependents on your tax return. If you are not claiming any dependents on your tax return, skip Part II and go to Part III 8.
Part II: Dependents’ Modified AGI

Note. Use Part II to figure the combined modified AGI for the dependents you included in your tax family. Only include the modified AGI of those dependents who are required to file a return. Do not include the modified AGI of dependents who are filing a tax return only to claim a refund of tax withheld or estimated tax.
9.Enter the combined AGI for your dependents from Form 1040, line 7, and Form 1040NR, line 369.
10.Enter any tax-exempt interest for your dependents from Form 1040, line 2a, and Form 1040NR, line 9b10.
11.Enter any amounts for your dependents from Form 2555, lines 45 and 50, and Form 2555-EZ, line 1811.
12.Enter for each of your dependents the excess, if any, of Form 1040, line 5a over line 5b12.
13.Add lines 9 through 12. Then go to Part III13.


Continued on next page
taxmap/pubs/p974-010.htm#en_us_publink100026763
PencilWorksheet X. Figuring Household Income and the Repayment Limitation (continued)
Part III: Repayment Limitation

Note. If you are filing Form 8885, see the Instructions for Worksheet X before completing this part.
14.Household income. Add lines 8 and 1314.
15.Enter the smaller of Worksheet W, line 19 or $600 ($300 if your filing status is single)15.
16.Subtract line 15 from line 14. If zero or less, enter -0-16.
17a.Enter the number of qualifying individuals in your tax family (including yourself)17a.  
17b.Enter the federal poverty line amount as determined by the family size on line 17a and federal poverty Table 1-1, 1-2, or 1-3 for your state of residence during 2018 in the Form 8962 instructions 17b.
18.Divide line 16 by line 17b. If the result is not a whole percentage, do not round; instead, multiply this number by 100 (to express it as a percentage) and then drop any numbers after the decimal point. For example, for 0.9984, enter the result as 99; for 1.8565, enter the result as 185; and for 3.997, enter the result as 399 18.%
 
  • If the result is less than 200, enter $600 ($300 if your filing status is single) on line 25. Skip lines 19 through 24.
  • If the result is 200 or more, go to line 19.
  
19.Enter the smaller of Worksheet W, line 19, or $1,550 ($775 if your filing status is single)19.
20.Subtract line 19 from line 14. If zero or less, enter -0-20.
21.Divide line 20 by line 17b. If the result is not a whole percentage, do not round; instead, multiply this number by 100 (to express it as a percentage) and then drop any numbers after the decimal point. For example, for 0.9984, enter the result as 99; for 1.8565, enter the result as 185; and for 3.997, enter the result as 399 21.%
 
  • If the result is less than 300, enter $1,550 ($775 if your filing status is single) on line 25. Skip lines 22 through 24.
  • If the result is 300 or more, go to line 22.
  
22.Enter the smaller of Worksheet W, line 19, or $2,600 ($1,300 if your filing status is single)22.
23.Subtract line 22 from line 14. If zero or less, enter -0-23.
24.Divide line 23 by line 17b. If the result is not a whole percentage, do not round; instead, multiply this number by 100 (to express it as a percentage) and then drop any numbers after the decimal point. For example, for 0.9984, enter the result as 99; for 1.8565, enter the result as 185; and for 3.997, enter the result as 399 24.%
 
  • If the result is less than 400, enter $2,600 ($1,300 if your filing status is single) on line 25.
  • If the result is 400 or more, enter the amount from Worksheet W, line 2, on line 25.
 
25.Enter the amount you were instructed to enter here by line 18, 21, or 24 (see instructions)25.
Part IV: Maximum Self-Employed Health Insurance Deduction
26.Add lines 6 and 25 26.
27.Enter the amount from Worksheet W, line 1 27.
28.Enter the smaller of line 26 or line 2728.
29.Enter the amount from Worksheet W, line 15 29.
30.Enter the smaller of line 28 or line 2930.
31.Add lines 5 and 30. Then use one of the methods that follow to figure the PTC and the self-employed health insurance deduction for specified premiums 31.
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Instructions for Worksheet X(p60)

rule
taxmap/pubs/p974-010.htm#en_us_publink100026306

Line 1.(p60)

rule
If you are filing Form 8582, Passive Activity Loss Limitations, and both lines 1d and 4 of that form are losses:
If you are filing Form 8814, Parents’ Election To Report Child’s Interest and Dividends, and the amount on Form 8814, line 4, is more than $1,050, you also must include the following amounts on line 1.
If you are filing Form 8815, Exclusion of Interest From Series EE and I U.S. Savings Bonds Issued After 1989, do not complete the form until you are instructed to do so later. Include on line 1 the amount from Schedule B (Form 1040), line 2.
taxmap/pubs/p974-010.htm#en_us_publink100036263

Line 4.(p60)

rule
Include your IRA deduction on line 4 only if you (and your spouse if filing a joint return) were not covered by a retirement plan at work or through self-employment.
taxmap/pubs/p974-010.htm#en_us_publink100044996

Line 25.(p60)

rule
Also enter this amount on line 28 of the Form 8962 you attach to your tax return if you are required to complete that line and you do not complete Worksheet Y. Do not enter an amount from Table 5 in the Form 8962 instructions.
taxmap/pubs/p974-010.htm#en_us_publink100050948

Special instructions for filers of Form 8885.(p61)

rule
If you file Form 8885, use the following instructions to complete Part III.
If (1) you are electing to take the HCTC on Form 8885 for at least 1 month of the year for individual(s) who also were enrolled in a qualified health plan offered through the Marketplace for at least 1 other month of the year and (2) you did not receive the benefit of advance monthly payments of the HCTC for those individual(s) during the year, do the following.
If you did receive the benefit of advance monthly payments of the HCTC for 1 or more month(s) of the year for individual(s) who also were enrolled in a qualified health plan offered through the Marketplace for at least 1 other month of the year, complete Form 8885 through line 4. If you are not instructed to complete the Excess Advance HCTC Repayment Worksheet in the Instructions for Form 8885 or if you enter an amount on line 3 of that worksheet, then add the amount from Form 8885, line 5, to the amount you are instructed to enter on lines 15, 19, and 22 of Worksheet X. If you are instructed to complete the Excess Advance HCTC Repayment Worksheet and enter an amount on line 4 of that worksheet, complete Worksheet X using the repayment limitations provided without any adjustments.
If you do not qualify to take the PTC (Form 8962, line 24, is -0- or blank), do not enter the amount from Worksheet X, line 25, on Form 8962, line 28. Instead, see Line 28 in the Form 8962 instructions to find out what to enter on line 28.
taxmap/pubs/p974-010.htm#en_us_publink100037486

Iterative Calculation Method(p62)

rule
Follow the steps below to figure your self-employed health insurance deduction and PTC under the Iterative Calculation Method. You do not have to use this method. You can use the Simplified Calculation Method (discussed later) or any computation method that satisfies each set of rules as long as the sum of the deduction claimed for the premiums and the PTC computed, taking the deduction into account, is less than or equal to the premiums.
EIC
Do not round to whole dollars when performing the computations under this method. Instead, use dollars and cents. This is necessary so you can complete Step 6.
taxmap/pubs/p974-010.htm#en_us_publink100037487

Step 1(p62)

rule
Figure your adjusted gross income (AGI), modified AGI, and household income using Worksheet X, line 31, as your self-employed health insurance deduction. If you did not fill out Worksheet X, use the amount from Worksheet W, line 17. Use Worksheets 1-1 and 1-2 in the Form 8962 instructions to figure modified AGI and household income.
EIC
If you are claiming any of the following deductions or exclusions, see Special Instructions for Self-Employed Individuals Who Claim Certain Deductions/Exclusions (discussed later) before you complete Step 1.
  1. Passive activity losses from rental real estate activities and lines 1d and 4 of Form 8582 are losses.
  2. IRA deduction and you (or your spouse if filing a joint return) were covered by a retirement plan at work or through self-employment.
  3. Exclusion of interest from series EE and I U.S. savings bonds issued after 1989.
  4. Student loan interest deduction.
  5. Tuition and fees deduction.*

*If applicable.
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Step 2(p62)

rule
Figure the total PTC on Form 8962 using the AGI, modified AGI, and household income you determined in Step 1. Enter the modified AGI and household income from Step 1 on the Form 8962. When figuring the PTC, use all enrollment premiums for qualified health plans in which you or an individual in your tax family enrolled. Complete this Form 8962 only through line 24. Do not attach this Form 8962 to your tax return.
taxmap/pubs/p974-010.htm#en_us_publink100074408

Cannot take PTC.(p62)

rule
If you are not eligible to take the PTC, stop here. Do not use this method. Instead, figure your self-employed health insurance deduction using the Self-Employed Health Insurance Deduction Worksheet in the Form 1040 or Form 1040NR instructions or, if required, Worksheet 6-A in chapter 6 of Pub. 535. If you are following the instructions under Special Instructions for Self-Employed Individuals Who Claim Certain Deductions/Exclusions, make this determination when you complete the final iteration of Step 2. Refigure the deductions/exclusions if you are not eligible for the PTC.
taxmap/pubs/p974-010.htm#en_us_publink100037489

Step 3(p62)

rule
Figure your self-employed health insurance deduction for specified premiums by completing the following worksheet.
EIC
If you have more than one trade or business under which you established a qualified health plan, see More than one trade or business, below, before you complete the Step 3 Worksheet.
taxmap/pubs/p974-010.htm#en_us_publink100021783

Step 3 Worksheet

Enter amounts in dollars and cents. Do not round to whole dollars.

1.Enter the amount from Worksheet W, line 1 1..  
 Caution: If the amounts on lines 12 through 23, column (e), of your Step 2 Form 8962 are not the same for each month and you had specified premiums for less than 12 months, skip lines 2 through 5 below and enter on line 6 the total of those column (e) amounts for the months you paid specified premiums.  
2.Enter the total PTC (Form 8962, line 24) you figured in Step 2, earlier 2..  
3.Enter the number of months in 2018 for which specified premiums were paid3.
 Note. Self-employment for part of a month counts as a full month of self-employment.   
4.Enter the number of months someone in your coverage family was enrolled in the qualified health plan4.
5.Divide line 3 by line 45.
6.Multiply line 5 by line 26..  
7.Subtract line 6 from line 17..  
8.Enter the amount from Worksheet X, line 30. If you did not complete Worksheet X, enter the amount from Worksheet W, line 16 8..  
9.Enter the smaller of line 7 or line 8. Then go to Step 4 next 9..  
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More than one trade or business.(p62)

rule
If you have more than one trade or business under which you established a qualified health plan, you must complete lines 1 through 7 separately for each trade or business. Use the following instructions to complete the Step 3 Worksheet.
taxmap/pubs/p974-010.htm#en_us_publink100030359
Line 1.(p62)
Enter the amounts for the separate trade or business.
If the Caution under line 1 applies to you, skip lines 2 through 5. Enter on line 6 the total of the column (e) amounts for the months you paid specified premiums that are allocable to the specified premiums you entered on line 1 for the separate trade or business. You can allocate the column (e) amounts using any reasonable method. One reasonable method is based on enrollment premiums for each plan. Under this method, multiply the total of the column (e) amounts for the months you paid specified premiums by a fraction. The numerator of the fraction is the amount of specified premiums you entered on line 1 for the separate trade or business. The denominator of the fraction is the total of the column (a) amounts for the months you paid specified premiums.
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Line 2.(p63)
Enter the Step 2 PTC that is allocable to the specified premiums you entered on line 1 for the separate trade or business. You can allocate the Step 2 PTC using any reasonable method. One reasonable method is based on enrollment premiums for each plan. Under this method, multiply the Step 2 PTC by a fraction. The numerator of the fraction is the amount of specified premiums you entered on line 1 for the separate trade or business. The denominator of the fraction is the amount on line 11, column (a), or the total of lines 12 through 23, column (a), of the Step 2 Form 8962.
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Lines 3 through 6.(p63)
Complete these lines for the plan established under the separate trade or business.
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Line 7.(p63)
After you complete this line for each trade or business, add the amounts on line 7 for all the trades or businesses. Use the total of the line 7 amounts to complete lines 8 and 9.
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Lines 8 and 9.(p63)
Complete these lines once for all trades or businesses.
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Step 4(p63)

rule
Refigure the total PTC on another Form 8962. Complete this Form 8962 through line 29. When refiguring the total PTC, use all enrollment premiums for qualified health plans in which you or any individual in your tax family enrolled. Determine AGI, modified AGI, and household income using the total of the Step 3 Worksheet, line 9, and Worksheet W, line 14, as your self-employed health insurance deduction. Use Worksheets 1-1 and 1-2 in the Form 8962 instructions to figure modified AGI and household income.
taxmap/pubs/p974-010.htm#en_us_publink100037491

Step 5(p63)

rule
Refigure your self-employed health insurance deduction for specified premiums by completing the Step 5 Worksheet.
EIC
If you have more than one trade or business under which you established a qualified health plan, see More than one trade or business, later, before you complete the Step 5 Worksheet.
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Step 5 Worksheet

Enter amounts in dollars and cents. Do not round to whole dollars.

1.Enter the amount from line 1 of the Step 3 Worksheet 1..  
 Caution: If you skipped lines 2 through 5 of the Step 3 Worksheet, skip lines 2 and 3 below and enter on line 4 the total of the column (e) amounts from your Step 4 Form 8962 for the months you paid specified premiums.  
2.Enter the total PTC (Form 8962, line 24) you figured in Step 4, earlier 2..  
3.Enter the amount from line 5 of the Step 3 Worksheet3.
4.Multiply line 3 by line 24..  
5.Subtract line 4 from line 15..  
6.Enter the amount from Worksheet X, line 30. If you did not complete Worksheet X, enter the amount from Worksheet W, line 16 6..  
7.Enter the smaller of line 5 or line 6. Then go to Step 6 next 7..  
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More than one trade or business.(p63)

rule
If you have more than one trade or business under which you established a qualified health plan, you must complete lines 1 through 5 separately for each trade or business. Use the following instructions to complete the Step 5 Worksheet.
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Line 1.(p63)
Enter the amount from the Step 3 Worksheet for the same separate trade or business for which you are completing the Step 5 Worksheet.
If the Caution under line 1 applies to you, skip lines 2 and 3. Enter on line 4 the total of the column (e) amounts for the months you paid specified premiums that are allocable to the specified premiums you entered on line 1 for the separate trade or business. Allocate the column (e) amounts using the same method you used on the Step 3 Worksheet.
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Line 2.(p63)
Enter the Step 4 PTC that is allocable to the premiums you entered on line 1 for the separate trade or business. Use the same allocation method you used on the Step 3 Worksheet.
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Line 3.(p63)
Enter the amount from the Step 3 Worksheet for the same separate trade or business for which you are completing the Step 5 Worksheet.
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Line 5.(p63)
After you complete this line for each trade or business, add the amounts on line 5 for all the trades or businesses. Use the total of the line 5 amounts to complete lines 6 and 7.
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Lines 6 and 7.(p63)
Complete these lines once for all trades or businesses.
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Step 6(p63)

rule
Answer the following three questions.
  1. Is the change in the self-employed health insurance deduction from Step 3 to Step 5 less than $1.00?
    ❑ Yes ❑ No
  2. Is the change in the total PTC from Step 2 to Step 4 less than $1.00?
    ❑ Yes ❑ No
  3. Did you answer "Yes" to both questions 1 and 2?
    ❑ Yes. You can claim a PTC for the amount you figured in Step 4. Attach the Form 8962 you used in Step 4 to your tax return. You can claim a self-employed health insurance deduction for the specified premiums equal to the amount on line 7 of the Step 5 Worksheet.

    Note. Your self-employed health insurance deduction is the total of the Step 5 Worksheet, line 7, and Worksheet W, line 14. Enter this total on line 29 of Schedule 1 (Form 1040) or Form 1040NR.

    ❑ No. Repeat Step 4 and Step 5 (using amounts determined in the immediately preceding step) until changes in both the self-employed health insurance deduction and the total PTC between steps are less than $1.00.
EIC
If you are unable to complete Step 6 because changes between steps are always $1.00 or more, do not use the Iterative Calculation Method. Instead, use the Simplified Calculation Method or any computation method that satisfies the rules for the self-employed health insurance deduction and PTC as long as the sum of the deduction claimed for the premiums and the PTC computed, taking the deduction into account, is less than or equal to the premiums.
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Simplified Calculation Method(p64)

rule
Follow the steps below to figure your self-employed health insurance deduction and PTC under the Simplified Calculation Method. You do not have to use this method. You can use the Iterative Calculation Method (discussed earlier) if you can complete Step 6 of that method or you can use any computation method that satisfies each set of rules as long as the sum of the deduction claimed for the premiums and the PTC computed, taking the deduction into account, is less than or equal to the premiums.
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Step 1(p64)

rule
Figure your AGI, modified AGI, and household income using Worksheet X, line 31, as your self-employed health insurance deduction. If you did not fill out Worksheet X, use the amount from Worksheet W, line 17. Use Worksheets 1-1 and 1-2 in the Form 8962 instructions to figure modified AGI and household income.
EIC
If you are claiming any of the following deductions or exclusions, see Special Instructions for Self-Employed Individuals Who Claim Certain Deductions/Exclusions (discussed later) before you complete Step 1.
  1. Passive activity losses from rental real estate activities and lines 1d and 4 of Form 8582 are losses.
  2. IRA deduction and you (or your spouse if filing a joint return) were covered by a retirement plan at work or through self-employment.
  3. Exclusion of interest from series EE and I U.S. savings bonds issued after 1989.
  4. Student loan interest deduction.
  5. Tuition and fees deduction.*

*If applicable.
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Step 2(p64)

rule
Figure the total PTC on Form 8962 using the AGI, modified AGI, and household income you determined in Step 1. Enter the modified AGI and household income from Step 1 on the Form 8962. When figuring the PTC, use all enrollment premiums for qualified health plans in which you or any individual in your tax family enrolled. Complete this Form 8962 only through line 24. Do not attach this Form 8962 to your tax return.
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Cannot take PTC.(p64)

rule
If you are not eligible to take the PTC, stop here. Do not use this method. Instead, figure your self-employed health insurance deduction using the Self-Employed Health Insurance Deduction Worksheet in the Form 1040 or Form 1040NR instructions or, if required, Worksheet 6-A in chapter 6 of Pub. 535. If you are following the instructions under Special Instructions for Self-Employed Individuals Who Claim Certain Deductions/Exclusions, make this determination when you complete the final iteration of Step 2. Refigure the deductions/exclusions if you are not eligible for the PTC.
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Step 3(p64)

rule
Figure your self-employed health insurance deduction by completing the following worksheet.
EIC
If you have more than one trade or business under which you established a qualified health plan, see More than one trade or business, below, before you complete the Step 3 Worksheet.
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PencilStep 3 Worksheet
1.Enter the amount from Worksheet W, line 1 1.
 Caution: If the amounts on lines 12 through 23, column (e), of your Step 2 Form 8962 are not the same for each month and you had specified premiums for less than 12 months, skip lines 2 through 5 below and enter on line 6 the total of those column (e) amounts for the months you paid specified premiums.  
2.Enter the total PTC (Form 8962, line 24) you figured in Step 2, earlier 2.
3.Enter the number of months in 2018 for which specified premiums were paid3.
 Note. Self-employment for part of a month counts as a full month of self-employment.   
4.Enter the number of months someone in your coverage family was enrolled in the qualified health plan4.
5.Divide line 3 by line 45.
6.Multiply line 5 by line 26.
7.Subtract line 6 from line 17.
8.Enter the amount from Worksheet X, line 30. If you did not complete Worksheet X, enter the amount from Worksheet W, line 16 8.
9.Enter the smaller of line 7 or line 89.
10.Enter the amount from Worksheet W, line 14 10.
11.Add lines 9 and 10. Use this amount as your self-employed health insurance deduction in Step 4 next. Also enter this amount on line 29 of Schedule 1 (Form 1040) or Form 1040NR 11.
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More than one trade or business.(p65)

rule
If you have more than one trade or business under which you established a qualified health plan, you must complete lines 1 through 7 separately for each trade or business. Use the following instructions to complete the Step 3 Worksheet.
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Line 1.(p65)
Enter the amounts for the separate trade or business.
If the Caution under line 1 applies to you, skip lines 2 through 5. Enter on line 6 the total of the column (e) amounts for the months you paid specified premiums that are allocable to the specified premiums you entered on line 1 for the separate trade or business. You can allocate the column (e) amounts using any reasonable method. One reasonable method is based on enrollment premiums for each plan. Under this method, multiply the total of the column (e) amounts for the months you paid specified premiums by a fraction. The numerator of the fraction is the amount of specified premiums you entered on line 1 for the separate trade or business. The denominator of the fraction is the total of the column (a) amounts for the months you paid specified premiums.
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Line 2.(p65)
Enter the Step 2 PTC that is allocable to the specified premiums you entered on line 1 for the separate trade or business. You can allocate the Step 2 PTC using any reasonable method. One reasonable method is based on enrollment premiums for each plan. Under this method, multiply the Step 2 PTC by a fraction. The numerator of the fraction is the amount of specified premiums you entered on line 1 for the separate trade or business. The denominator of the fraction is the amount on line 11, column (a), or the total of lines 12 through 23, column (a), of the Step 2 Form 8962.
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Lines 3 through 6.(p65)
Complete these lines for the plan established under the separate trade or business.
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Line 7.(p65)
After you complete this line for each trade or business, add the amounts on line 7 for all the trades or businesses. Use the total of the line 7 amounts to complete lines 8 through 11.
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Lines 8 through 11.(p65)
Complete these lines once for all trades or businesses.
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Step 4(p65)

rule
Refigure the final PTC on another Form 8962. Complete this Form 8962 through line 29. Attach this Form 8962 to your tax return. When refiguring the PTC, use all enrollment premiums for qualified health plans in which you or any individual in your tax family enrolled. Determine AGI, modified AGI, and household income using the amount from line 11 of the Step 3 Worksheet as your self-employed health insurance deduction. Use Worksheets 1-1 and 1-2 in the Form 8962 instructions to figure modified AGI and household income.
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Special Instructions for Self-Employed Individuals Who Claim Certain Deductions/Exclusions(p65)

rule
The instructions in this section apply to you if you claim any of the following deductions or exclusions.
  1. Passive activity losses from rental real estate activities and lines 1d and 4 of Form 8582 are losses.
  2. IRA deduction and you (or your spouse if filing a joint return) were covered by a retirement plan at work or through self-employment.
  3. Exclusion of interest from series EE and I U.S. savings bonds issued after 1989.
  4. Student loan interest deduction.
  5. Tuition and fees deduction.*

*If applicable.
Read the following instructions if you are claiming 1 or more of the deductions/exclusions listed above. Read these instructions before you complete the Iterative Calculation Method or Simplified Calculation Method.
  1. The first time you complete the Iterative Calculation Method or Simplified Calculation Method, you do so without including any of the deductions/exclusions listed above in AGI, modified AGI, or household income. If you use the Simplified Calculation Method, complete it only through Step 3. Enter "400" on the interim Form 8962, line 5, if you answer "Yes" on Worksheet 2, line 4, in the Form 8962 instructions.
  2. After you complete (1), figure the deduction/exclusion using the appropriate form or worksheet in your tax return instructions. When figuring modified AGI on the form or worksheet (or AGI on Form 8903), use as your self-employed health insurance deduction the amount from Step 6 of the Iterative Calculation Method or Step 3 of the Simplified Calculation Method.

    If you are claiming more than 1 deduction/exclusion on the list, you must figure the deductions/exclusions in the order shown in the list. For example, if you are claiming the student loan interest deduction and the exclusion of interest from series EE and I U.S. savings bonds, you must figure the exclusion of interest from series EE and I U.S. savings bonds first and complete (3) and (4) or (5) using that exclusion. Then you figure the student loan interest deduction, as explained in (5) or at the end of Worksheets Y and Z.
  3. Enter the deduction/exclusion you figured in (2) on your tax return.
  4. If you completed Worksheet X, complete Worksheet Y and follow the instructions under line 22 of that Worksheet. Skip (5). If you file Form 8885, also see Special instructions for filers of Form 8885.
  5. If you did not complete Worksheet X, do the following.
    1. Repeat the Iterative Calculation Method or Simplified Calculation Method. Use the deduction/exclusion from (2) in any step that requires you to figure AGI, modified AGI, and household income.
    2. If the amount from (2) is the only deduction/exclusion on the list you are claiming, complete either method through the last step and follow the step instructions for claiming the PTC and self-employed health insurance deduction on your return. Skip (c).
    3. If the amount from (2) is not the only deduction/exclusion on the list you are claiming, repeat the Iterative Calculation Method through Step 6 or the Simplified Calculation Method through Step 3. Enter "400" on the interim Form 8962, line 5, if you answered "Yes" on Worksheet 2, line 4, in the Form 8962 instructions. Then figure the additional deduction/exclusion using the appropriate form or worksheet in your tax return instructions. When figuring modified AGI on the form or worksheet (or AGI on Form 8903), use as your self-employed health insurance deduction the amount from Step 6 of the Iterative Calculation Method or Step 3 of the Simplified Calculation Method. Then repeat (3) and (5) for each additional deduction/exclusion. Follow (5b) for your final deduction/exclusion.
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Special instructions for filers of Form 8885. (p66)

rule
If you file Form 8885, and you completed Worksheet X, use the following instructions to complete Worksheets Y and Z.
If (1) you are electing to take the Health Coverage Tax Credit (HCTC) on Form 8885 for at least 1 month of the year for individual(s) who also were enrolled in a qualified health plan offered through the Marketplace for at least 1 other month of the year and (2) you did not receive the benefit of advance monthly payments of the HCTC for those individual(s) during the year, do the following.
If you did receive the benefit of advance monthly payments of the HCTC for 1 or more month(s) of the year for individual(s) who also were enrolled in a qualified health plan offered through the Marketplace for at least 1 other month of the year, complete Form 8885 through line 4. If you are not instructed to complete the Excess Advance HCTC Repayment Worksheet in the Instructions for Form 8885 or if you enter an amount on line 3 of that worksheet, then add the amount from Form 8885, line 5, to the amount you are instructed to enter on lines 4, 8, and 11 of Worksheets Y and Z. If you are instructed to complete the Excess Advance HCTC Repayment Worksheet and enter an amount on line 4 of that worksheet, complete Worksheets Y and Z using the repayment limitations provided without any adjustments.
If you do not qualify to take the PTC (Form 8962, line 24, is -0- or blank), do not enter the amount from Worksheet X, line 25; Worksheet Y, line 14; or Worksheet Z, line 14, on Form 8962, line 28. Instead, see Line 28 in the Form 8962 instructions to find out what to enter on line 28.
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PencilWorksheet Y. Refiguring Household Income and the Repayment Limitation When Claiming Certain Deductions or Exclusions
Caution.If you are filing Form 8885, see Special instructions for filers of Form 8885 before you complete this worksheet.
1.Enter the amount from Worksheet X, line 14 1.
2.Enter the deduction or exclusion2.
3.Revised household income. Subtract line 2 from line 13.
4.Enter the smaller of Worksheet W, line 19, or $600 ($300 if your filing status is single)4.
5.Subtract line 4 from line 3. If zero or less, enter -0-5.
6.Enter the amount from Worksheet X, line 17b 6.
7.Divide line 5 by line 6. If the result is not a whole percentage, do not round; instead, multiply this number by 100 (to express it as a percentage) and then drop any numbers after the decimal point. For example, for 0.9984, enter the result as 99; for 1.8565, enter the result as 185; and for 3.997, enter the result as 399 7.%
 
  • If the result is less than 200, enter $600 ($300 if your filing status is single) on line 14. Skip lines 8 through 13.
  • If the result is 200 or more, go to line 8.
  
8.Enter the smaller of Worksheet W, line 19, or $1,550 ($775 if your filing status is single)8.
9.Subtract line 8 from line 3. If zero or less, enter -0-9.
10.Divide line 9 by line 6. If the result is not a whole percentage, do not round; instead, multiply this number by 100 (to express it as a percentage) and then drop any numbers after the decimal point. For example, for 0.9984, enter the result as 99; for 1.8565, enter the result as 185; and for 3.997, enter the result as 399 10.%
  • If the result is less than 300, enter $1,550 ($775 if your filing status is single) on line 14. Skip lines 11 through 13.
  • If the result is 300 or more, go to line 11.
  
11.Enter the smaller of Worksheet W, line 19, or $2,600 ($1,300 if your filing status is single) 11.
12.Subtract line 11 from line 3. If zero or less, enter -0-12.
13.Divide line 12 by line 6. If the result is not a whole percentage, do not round; instead, multiply this number by 100 (to express it as a percentage) and then drop any numbers after the decimal point. For example, for 0.9984, enter the result as 99; for 1.8565, enter the result as 185; and for 3.997, enter the result as 399 13.%
 
  • If the result is less than 400, enter $2,600 ($1,300 if your filing status is single) on line 14.
  • If the result is 400 or more, enter the amount from Worksheet W, line 2, on line 14.
  
14.Enter the amount you were instructed to enter here by line 7, 10, or 13. Also enter this amount on line 28 of the Form 8962 you attach to your tax return if you are required to complete that line and you do not complete Worksheet Z. Do not enter an amount from Table 5 in the Form 8962 instructions. 14.
15.Enter the amount from Worksheet X, line 6 15.
16.Add lines 14 and 15 16.
17.Enter the amount from Worksheet X, line 27 17.
18.Enter the smaller of line 16 or line 1718.
19.Enter the amount from Worksheet X, line 29 19.
20.Enter the smaller of line 18 or line 1920.
21.Enter the amount from Worksheet X, line 5 21.
22.Add lines 20 and 21. Then see Next, below, for further instructions 22.
Next. Repeat the Iterative Calculation Method or Simplified Calculation Method, whichever applies. In Step 1 of either method, use the amount on line 22, above, as your self-employed health insurance deduction. Also use the amount on line 2 above in any step that requires you to figure AGI, modified AGI, and household income. If the amount on line 2, above, is the only deduction/exclusion on the list that you are claiming, complete either method through the last step. If you are claiming another deduction/exclusion on the list, do the following.
  • When you repeat either method as explained above, complete the Iterative Calculation Method through Step 6 or complete the Simplified Calculation Method through Step 3. Enter "400" on the interim Form 8962, line 5, if you answer "Yes" on Worksheet 2, line 4, in the Form 8962 instructions.
  • Figure the other deduction/exclusion using the appropriate form or the worksheet provided in your tax return instructions. Use the self-employed health insurance deduction you figured in either Step 6 of the Iterative Calculation Method or Step 3 of the Simplified Calculation Method to figure modified AGI for the other deduction/exclusion.
  • Then complete Worksheet Z for the other deduction/exclusion.
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PencilWorksheet Z. Refiguring Household Income and the Repayment Limitation When Claiming Certain Deductions or Exclusions
Before you begin:
  • If you are filing Form 8885, see Special instructions for filers of Form 8885 before you complete this worksheet.
1.Enter the amount from Worksheet Y, line 3 1.
2.Enter the deduction or exclusion2.
3.Revised household income. Subtract line 2 from line 13.
4.Enter the smaller of Worksheet W, line 19, or $600 ($300 if your filing status is single)4.
5.Subtract line 4 from line 3. If zero or less, enter -0-5.
6.Enter the amount from Worksheet X, line 17b 6.
7.Divide line 5 by line 6. If the result is not a whole percentage, do not round; instead, multiply this number by 100 (to express it as a percentage) and then drop any numbers after the decimal point. For example, for 0.9984, enter the result as 99; for 1.8565, enter the result as 185; and for 3.997, enter the result as 399 7.%
 
  • If the result is less than 200, enter $600 ($300 if your filing status is single) on line 14. Skip lines 8 through 13.
  • If the result is 200 or more, go to line 8.
  
8.Enter the smaller of Worksheet W, line 19, or $1,550 ($775 if your filing status is single)8.
9.Subtract line 8 from line 3. If zero or less, enter -0-9.
10.Divide line 9 by line 6. If the result is not a whole percentage, do not round; instead, multiply this number by 100 (to express it as a percentage) and then drop any numbers after the decimal point. For example, for 0.9984, enter the result as 99; for 1.8565, enter the result as 185; and for 3.997, enter the result as 399 10.%
 
  • If the result is less than 300, enter $1,550 ($775 if your filing status is single) on line 14. Skip lines 11 through 13.
  • If the result is 300 or more, go to line 11.
  
11.Enter the smaller of Worksheet W, line 19, or $2,600 ($1,300 if your filing status is single)11.
12.Subtract line 11 from line 3. If zero or less, enter -0-12.
13.Divide line 12 by line 6. If the result is not a whole percentage, do not round; instead, multiply this number by 100 (to express it as a percentage) and then drop any numbers after the decimal point. For example, for 0.9984, enter the result as 99; for 1.8565, enter the result as 185; and for 3.997, enter the result as 399 13.%
 
  • If the result is less than 400, enter $2,600 ($1,300 if your filing status is single) on line 14.
  • If the result is 400 or more, enter the amount from Worksheet W, line 2, on line 14.
  
14.Enter the amount you were instructed to enter here by line 7, 10, or 13. Also enter this amount on line 28 of the Form 8962 you attach to your tax return if you are required to complete that line. Do not enter an amount from Table 5 in the Form 8962 instructions. 14.
15.Enter the amount from Worksheet X, line 6 15.
16.Add lines 14 and 15 16.
17.Enter the amount from Worksheet X, line 27 17.
18.Enter the smaller of line 16 or line 1718.
19.Enter the amount from Worksheet X, line 29 19.
20.Enter the smaller of line 18 or line 1919.
21.Enter the amount from Worksheet X, line 5 21.
22.Add lines 20 and 21. Then see Next, below, for further instructions 22.
Next. Repeat the Iterative Calculation Method or Simplified Calculation Method, whichever applies. In Step 1 of either method, use the amount on line 22, above, as your self-employed health insurance deduction. Also use the amounts on line 2 of Worksheets Y and Z in any step that requires you to figure AGI, modified AGI, and household income. If you are not claiming any more deductions/exclusions on the list, complete either method through the last step and follow the step instructions for claiming the PTC and self-employed health insurance deduction on your tax return. If you are claiming another deduction/exclusion on the list, do the following.
  • When you repeat either method as explained above, complete the Iterative Calculation Method through Step 6 or complete the Simplified Calculation Method through Step 3. Enter "400" on the interim Form 8962, line 5, if you answer "Yes" on Worksheet 2, line 4, in the Form 8962 instructions.
  • Figure the other deduction/exclusion using the appropriate form or the worksheet provided in your tax return instructions. Use the self-employed health insurance deduction you figured in either Step 6 of the Iterative Calculation Method or Step 3 of the Simplified Calculation Method to figure modified AGI for the other deduction/exclusion.
  • Then complete another Worksheet Z for the other deduction/exclusion.
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Illustrated Example of the Simplified Calculation Method(p69)

rule
The following example illustrates the Simplified Calculation Method.
In 2018, Carla Birch, her husband Jim, and their two dependent children enrolled in the applicable SLCSP through the Marketplace. The annual premium was $12,000, and $4,200 in APTC was paid for Carla, her husband, and 2 dependent children. All of the premiums are specified premiums. Carla operated a business as a sole proprietorship during the entire year. Carla and Jim are filing a joint Form 1040 (not illustrated). The income and deductions on their Form 1040 and Schedule 1 (Form 1040), excluding Schedule 1 (Form 1040), line 29, consist of the following.
Jim's salary (Form 1040, line 1)$59,625
Taxable interest (Form 1040, line 2b) 419
Carla’s net profit from her business on Schedule C (Form 1040, line 12)30,000
Total income (Form 1040, line 6)90,044
Deductible part of Carla’s self-employment tax (Schedule 1 (Form 1040), line 27)2,119
Carla’s qualified retirement plan deduction (Schedule 1 (Form 1040), line 28)2,500
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Carla’s Worksheet W(p69)

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Carla begins by completing Worksheet W to determine the limit on the self-employed health insurance deduction for specified premiums.
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Carla's Worksheet X(p69)

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Because Carla had APTC during the months of self-employment, she completes Worksheet X, Parts I and III. She skips Part II because neither one of her children is required to file a federal income tax return for 2018.
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Line 1.(p69)

rule
Carla enters $90,044, which is the total income shown on line 6 of her Form 1040. Total income is the sum of Jim’s salary, taxable interest, and Carla’s net profit.
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Line 4.(p69)

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Carla enters $4,619. This is the total of the deductible part of her self-employment tax and her qualified retirement plan deduction.
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Line 17b.(p69)

rule
Carla enters $24,600. This is the federal poverty line shown in Table 1-1 in the Form 8962 instructions for a family size of four.
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PencilCarla's Worksheet W. Figuring the Limit on the Self-Employed Health Insurance Deduction for Specified Premiums
Caution.If you have more than one trade or business under which a qualified health plan is established, complete lines 4 through 13 separately for each trade or business. Add the amounts on line 13 for all the trades or businesses. Then complete lines 14 through 17 once for all trades or businesses.
1.Enter your specified premiums. See Specified Premiums under Instructions for Worksheet P, earlier 1.12,000
2.Enter the APTC from Form 1095-A, Part III, column C, that is attributable to the premiums on line 12.4,200
3.Subtract line 2 from line 13.7,800
4.Enter your net profit* and any other earned income** from the business under which the qualified health plan is established. Do not include Conservation Reserve Program payments exempt from self-employment tax. If the business is an S corporation, skip to line 11 4.30,000
5.Enter the total of all net profits* from: Schedule C (Form 1040), line 31; Schedule C-EZ (Form 1040), line 3; Schedule F (Form 1040), line 34; or Schedule K-1 (Form 1065), box 14, code A; plus any other income allocable to the profitable business. Do not include Conservation Reserve Program payments exempt from self-employment tax. See the Instructions for Schedule SE (Form 1040). Do not include any net losses shown on these schedules 5.30,000
6.Divide line 4 by line 56.1.0
7.Multiply line 27 of Schedule 1 (Form 1040) or Form 1040NR by line 67.2,119
8.Subtract line 7 from line 48.27,881
9. Enter the amount, if any, from line 28 of Schedule 1 (Form 1040) or Form 1040NR, attributable to the same business for which the qualified health plan is established 9.2,500
10.Subtract line 9 from line 810.25,381
11.Enter your Medicare wages (Form W-2, box 5) from an S corporation in which you are a more-than-2% shareholder and in which the qualified health plan is established 11.
12.Enter any amount from Form 2555, line 45, attributable to the amount entered on line 4 or line 11 above, or any amount from Form 2555-EZ, line 18, attributable to the amount entered on line 11 above 12.-0-
 Note. If you are not filing Form 2555 or 2555-EZ, enter -0-.   
13.Subtract line 12 from line 10 or line 11, whichever applies13.25,381
14.Enter your self-employed health insurance deduction for nonspecified premiums from Worksheet P, line 3, or Worksheet 6-A, line 14, in chapter 6 of Pub. 535 14.
15.Subtract line 14 from line 13 15.25,381
16.Enter the smaller of line 3 or line 1516.7,800
17.Add lines 14 and 1617.7,800
18.Is line 2 blank or -0-?18.
 
❑ Yes. Skip line 19 and Worksheet X. Use one of the methods that follow Worksheet X to figure the PTC and self-employed health insurance deduction for specified premiums.
❑ No. Go to line 19.
  
19.Subtract line 16 from line 15. Then go to Worksheet X19.17,581

*If you used either optional method to figure your net earnings from self-employment from any business, do not enter your net profit from the business. Instead, enter the amount attributable to that business from Schedule SE, Section B, line 4b.

**Earned income includes net earnings and gains from the sale, transfer, or licensing of property you created. However, it does not include capital gain income.
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PencilCarla's Worksheet X. Figuring Household Income and the Repayment Limitation
Complete this worksheet only if APTC was paid to your insurer on your behalf for the months you were self-employed.
Part I: Taxpayer's Modified AGI
1.Combine the amounts from:
  • Form 1040, lines 2a, 6, and the excess, if any, of line 5a over line 5b.
  • Form 1040NR, lines 9b and 23
1.90,044
 Note. See instructions if you are filing Form 8582, 8814, or 8815.   
2.Enter any amounts from Form 2555, lines 45 and 50, and Form 2555-EZ, line 182.
3.Add lines 1 and 23.90,044
4.Enter the total of the amounts from:
  • Schedule 1 (Form 1040), lines 23 through 28, 30, and 31a, plus any write-in adjustments you entered on the dotted line next to Schedule 1 (Form 1040), line 36, other than any amounts identified as "DPAD."
  • Form 1040NR, lines 24 through 28, 30, and 31, plus any write-in adjustments you entered on the dotted line next to line 34, other than any amounts identified as "DPAD"
4.4,619
 Note. See instructions if you made contributions to a traditional IRA.   
5.Enter the amount from Worksheet W, line 14 5.
6.Enter the amount from Worksheet W, line 16 6.7,800
7.Add lines 4, 5, and 67.12,419
8.Subtract line 7 from line 3. Then go to Part II if you are claiming dependents on your tax return. If you are not claiming any dependents on your tax return, skip Part II and go to Part III 8.77,625
Part II: Dependents’ Modified AGI
Note. Lines 9–13 of this part are omitted because Carla's dependent children are not required to file federal income tax returns.
Part III: Repayment Limitation
  Note. If you are filing Form 8885, see the instructions for Worksheet X before completing this part.
14.Household income. Add lines 8 and 1314.77,625
15.Enter the smaller of Worksheet W, line 19, or $600 ($300 if your filing status is single)15.600
16.Subtract line 15 from line 14. If zero or less, enter -0-16.77,025
17a.Enter the number of qualifying individuals in your tax family (including yourself)17a.4  
17b.Enter the federal poverty line amount as determined by the family size on line 17a and federal poverty Table 1-1, 1-2, or 1-3 for your state of residence during 2018 in the Form 8962 instructions 17b.24,600
18.Divide line 16 by line 17b. If the result is not a whole percentage, do not round; instead, multiply this number by 100 (to express it as a percentage) and then drop any numbers after the decimal point. For example, for 0.9984, enter the result as 99; for 1.8565, enter the result as 185; and for 3.997, enter the result as 399 18.313%
 
  • If the result is less than 200, enter $600 ($300 if your filing status is single) on line 25. Skip lines 19 through 24.
  • If the result is 200 or more, go to line 19.
  
19.Enter the smaller of Worksheet W, line 19, or $1,550 ($775 if your filing status is single)19.1,550
20.Subtract line 19 from line 14. If zero or less, enter -0-20.76,075
21.Divide line 20 by line 17b. If the result is not a whole percentage, do not round; instead, multiply this number by 100 (to express it as a percentage) and then drop any numbers after the decimal point. For example, for 0.9984, enter the result as 99; for 1.8565, enter the result as 185; and for 3.997, enter the result as 399 21.309%
 
  • If the result is less than 300, enter $1,550 ($775 if your filing status is single) on line 25. Skip lines 22 through 24.
  • If the result is 300 or more, go to line 22.
  
22.Enter the smaller of Worksheet W, line 19, or $2,600 ($1,300 if your filing status is single)22.2,600
23.Subtract line 22 from line 14. If zero or less, enter -0-23.75,025
24.Divide line 23 by line 17b. If the result is not a whole percentage, do not round; instead, multiply this number by 100 (to express it as a percentage) and then drop any numbers after the decimal point. For example, for 0.9984, enter the result as 99; for 1.8565, enter the result as 185; and for 3.997, enter the result as 399 24.304%
 
  • If the result is less than 400, enter $2,600 ($1,300 if your filing status is single) on line 25.
  • If the result is 400 or more, enter the amount from Worksheet W, line 2, on line 25.
 
25.Enter the amount you were instructed to enter here by line 18, 21, or 24 (see instructions)25.2,600
Part IV: Maximum Self-Employed Health Insurance Deduction
26.Add lines 6 and 2526.10,400
27.Enter the amount from Worksheet W, line 1 27.12,000
28.Enter the smaller of line 26 or line 2728.10,400
29.Enter the amount from Worksheet W, line 15 29.25,381
30.Enter the smaller of line 28 or line 2930.10,400
31.Add lines 5 and 30. Then use one of the methods that follow to figure the PTC and the self-employed health insurance deduction for specified premiums 31.10,400
taxmap/pubs/p974-010.htm#en_us_publink100029675

The Simplified Calculation Method for Carla(p70)

rule
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Step 1.(p70)

rule
Carla figures her AGI, modified AGI, and household income using $10,400 as the self-employed health insurance deduction. (She does not enter $10,400 on Schedule 1 (Form 1040), line 29.) Her AGI is $75,025, figured as follows.
Total income from Form 1040, line 6 $90,044
Minus: deductible part of self-employment tax (2,119)
Minus: qualified retirement plan deduction (2,500)
Minus: self-employed health insurance deduction from Worksheet X, line 31(10,400)
Equals: AGI75,025
Carla uses this AGI amount on Worksheet 1-1. Taxpayer’s Modified AGI Worksheet—Line 2a (not illustrated) in the Form 8962 instructions to figure her modified AGI and household income. Her modified AGI and household income are each $75,025, the same as her AGI figured in this Step 1.
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Step 2.(p70)

rule
Carla figures the total PTC on Form 8962 using the modified AGI and household income figured in Step 1. This Form 8962 is shown later in this publication for purposes of illustration and labeled “Carla’s Step 2 PTC.” She completes this Form 8962 only through line 24. She uses the total PTC shown on line 24 ($4,828) to figure the self-employed health insurance deduction in Step 3, later. She does not attach this Form 8962 to her tax return.
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Step 3.(p72)

rule
Carla completes the following worksheet to figure the self-employed health insurance deduction she will enter on Schedule 1 (Form 1040), line 29.
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PencilCarla’s Step 3 Worksheet
1.Enter the amount from Worksheet W, line 1 1.12,000
 Caution: If the amounts on lines 12 through 23, column (e), of your Step 2 Form 8962 are not the same for each month and you had specified premiums for less than 12 months, skip lines 2 through 5 below and enter on line 6 the total of those column (e) amounts for the months you paid specified premiums.  
2.Enter the total PTC (Form 8962, line 24) you figured in Step 2, earlier 2.4,828
3.Enter the number of months in 2018 for which specified premiums were paid3.12
 Note. Self-employment for part of a month counts as a full month of self-employment.   
4.Enter the number of months someone in your coverage family was enrolled in the qualified health plan4.12
5.Divide line 3 by line 45.1.0
6.Multiply line 5 by line 26.4,828
7.Subtract line 6 from line 17.7,172
8.Enter the amount from Worksheet X, line 30. If you did not complete Worksheet X, enter the amount from Worksheet W, line 16 8.10,400
9.Enter the smaller of line 7 or line 89.7,172
10.Enter the amount from Worksheet W, line 14 10.-0-
11.Add lines 9 and 10. Use this amount as your self-employed health insurance deduction in Step 4 next. Also enter this amount on line 29 of Schedule 1 (Form 1040) or Form 1040NR 11.7,172
taxmap/pubs/p974-010.htm#en_us_publink100021789

Step 4.(p72)

rule
Carla refigures the final PTC on another Form 8962. This Form 8962 is shown later in this publication for purposes of illustration and is labeled "Carla’s Step 4 PTC." Carla figures AGI, modified AGI, and household income using the amount from line 11 of the Step 3 Worksheet as her self-employed health insurance deduction. Her AGI is $78,253, figured as follows.
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PencilCarla’s Step 4 Worksheet
Total income from Form 1040, line 6$90,044
Minus: deductible part of self-employment tax (2,119)
Minus: qualified retirement plan deduction (2,500)
Minus: self-employed health insurance deduction from line 11 of the Step 3 Worksheet(7,172)
Equals: AGI78,253
Carla uses this AGI amount on Worksheet 1-1. Taxpayer’s Modified AGI Worksheet—Line 2a (not illustrated) in the Form 8962 instructions to refigure her modified AGI and household income. Her modified AGI and household income are each $78,253, the same as her AGI figured earlier.
Carla completes Form 8962 through line 26. She enters the amount from line 26 ($319) on Schedule 5 (Form 1040), line 70, and attaches Form 8962.
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Carla’s Step 2 PTC

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Carla’s Step 4 PTC

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