skip navigation
Search Help
Navigation Help

Tax Map Index
ABCDEFGHI
JKLMNOPQR
STUVWXYZ#

International
Tax Topic Index

Affordable Care Act
Tax Topic Index

Exempt Organization
Tax Topic Index

FAQs
Forms
Publications
Tax Topics
Worksheets

Comments
About Tax Map

IRS.gov Website
Publication 974
taxmap/pubs/p974-011.htm#en_us_publink100020667

Self-Employed Health Insurance Deduction and PTC(p50)

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 2015, and you are 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.
  1. If you are filing Form 1040, complete lines 30 and 31a. Also, figure any write-in adjustments you will enter on the dotted line next to line 36.
  2. If you are filing Form 1040NR, complete lines 30 and 31. Also, figure any write-in adjustments you will enter on the dotted line next to line 35.
  3. Complete line 32 of Form 1040 or Form 1040NR if you made contributions to a traditional IRA and you (and your spouse if filing a joint return) were not covered by a retirement plan at work or through self-employment.
  4. If you elect to report your child’s interest and dividends on your tax return, complete Form 8814.
  5. If, during 2015, you were an eligible trade adjustment assistance (TAA) recipient, alternative TAA recipient, reemployment TAA recipient, or Pension Benefit Guaranty Corporation pension payee, read the Instructions for Form 8885 to find out if you meet the requirements for electing the health coverage tax credit (HCTC).If you elect the HCTC and you do not take the PTC, skip the rest of these special instructions.
    If you elect the HCTC and also take the PTC for any month, do the following.
    1. See Line 9 in the Form 8962 instructions to determine if you need to allocate policy amounts (enrollment premiums, SLCSP, and/or APTC) on a Form 1095-A between your tax family and another tax family. If you need to allocate policy amounts, complete Form 8962, Part IV, according to the instructions.
    2. Complete Form 8885.
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 W only if advance payments of the premium tax credit (APTC) were made to your insurer on your behalf for the months you were self-employed and the APTC was paid for a plan for which you are not also electing the HCTC. If APTC was not paid to your insurer on your behalf for the months you were self-employed or APTC was paid only for a plan for which you are electing the HCTC, skip Worksheet W.
  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/p974-011.htm#en_us_publink100029576
PencilWorksheet P. Self-Employed Health Insurance Deduction for Nonspecified Premiums
Before you begin: ✓ If, during 2015, you were an eligible trade adjustment assistance (TAA) recipient, alternative TAA recipient, reemployment TAA recipient, or Pension Benefit Guaranty Corporation pension payee, do not include on line 1 of this worksheet any amounts from Form 8885, line 4.
✓ 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 2015 for health insurance coverage established under your business (or the S corporation in which you were a more-than-2% shareholder) for 2015 for you, your spouse, and your dependents. Your insurance can also cover your child who was under age 27 at the end of 2015, 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 Form 1040 or 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 Form 1040 or 1040NR. Use Form 8962 to figure the premium tax credit for specified premiums.
  • If line 2 is more than line 1, complete Worksheet W if APTC was paid to your insurer on your behalf for the months you were self-employed and the APTC was paid for a plan for which you are not also electing the HCTC. If APTC was not paid to your insurer on your behalf for the months you were self-employed or APTC was paid only for a plan for which you are electing the HCTC, skip Worksheet W and go to 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/p974-011.htm#en_us_publink100037482

Instructions for Worksheet P(p51)

rule
Use Worksheet P to figure the amount you can deduct for nonspecified premiums.
taxmap/pubs/p974-011.htm#en_us_publink100037483

Exceptions.(p51)

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/p974-011.htm#en_us_publink100037484

Nonspecified Premiums(p51)

rule
A nonspecified premium is either of the following.
Note.If you are filing Form 8885, nonspecified premiums do not include premiums entered on line 4 of that form.
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/p974-011.htm#en_us_publink100036351

Example.(p52)

In 2015, 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 the Worksheet 6-A in chapter 6 of Pub. 535.
taxmap/pubs/p974-011.htm#en_us_publink100037485

Specified Premiums(p52)

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 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) have been paid by the due date of your tax return (not including extensions). Qualified health plan, coverage family, and enrollment premiums are defined earlier under Terms You May Need To Know.
Note.If you are filing Form 8885, specified premiums do not include premiums entered on line 4 of that form.
taxmap/pubs/p974-011.htm#en_us_publink100036354

Example.(p52)

You were enrolled in a qualified health plan through the Marketplace for all of 2015 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 5, and Worksheet X, line 1, if you are required to complete those worksheets. You are not allowed a self-employed health insurance deduction for the January – 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 – August.
taxmap/pubs/p974-011.htm#en_us_publink100041111

Plan covering individuals in another tax family.(p52)

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/p974-011.htm#en_us_publink100036261

Plan covering individuals not in your coverage family.(p52)

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.
taxmap/pubs/p974-011.htm#en_us_publink100029655
Example.(p52)
Gary was self-employed in 2015 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 5, and Worksheet X, line 1. 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.
taxmap/pubs/p974-011.htm#en_us_publink100026762
PencilWorksheet W. Figuring Household Income and the Limitation on Additional Tax
Note.Complete this worksheet only if (1) advance payments of the premium tax credit (APTC) were made to your insurer on your behalf for the months you were self-employed and (2) the APTC was paid for a plan for which you are not also electing the HCTC.
Part I: Taxpayer's Modified AGI
1.Combine the amounts from:
  • Form 1040, lines 8b, 22, and the excess, if any, of line 20a over line 20b.
  • 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.
4a.Enter the total of the amounts from:
  • Form 1040, lines 23 through 28, 30, and 31a, plus any write-in adjustments you entered on the dotted line next to line 36.
  • Form 1040NR, lines 24 through 28, 30, and 31, plus any write-in adjustments you entered on the dotted line next to line 35
4a.
 Note. See instructions if you made contributions to a traditional IRA.  
4b.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 4b.
5.Enter specified premiums (see Specified Premiums under Instructions for Worksheet P, earlier) 5.
6.Enter APTC attributable to the premiums on line 5 (see instructions)6.
7. Subtract line 6 from line 57.
8.Add lines 4a, 4b, and 78.
9.Subtract line 8 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 9.
Part II: Dependents’ Modified AGI

Note. Use Part II to figure the combined modified AGI for the dependents you claimed as exemptions on your return. 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.
10.Enter the combined AGI for your dependents from Form 1040, line 38; Form 1040A, line 22; Form 1040EZ, line 4; and Form 1040NR, line 37 10.
11.Enter any tax-exempt interest for your dependents from Form 1040, line 8b; Form 1040A, line 8b; Form 1040EZ, the amount written to the left of the line 2 entry space; and Form 1040NR, line 9b 11.
12.Enter any amounts for your dependents from Form 2555, lines 45 and 50, and Form 2555-EZ, line 1812.
13.Enter for each of your dependents the excess, if any, of Form 1040, line 20a over line 20b; and Form 1040A, line 14a over line 14b 13.
14.Add lines 10 through 13. Then go to Part III14.


Continued on next page.
taxmap/pubs/p974-011.htm#en_us_publink100026763
PencilWorksheet W. Figuring Household Income and the Limitation on Additional Tax (continued)
Part III: Limitation on Additional Tax
15.Household income. Add lines 9 and 1415.
16.Enter $600 ($300 if your filing status is single)16.
17.Subtract line 16 from line 15. If zero or less, enter -0-17.
18a.Enter the number of exemptions from Form 1040, line 6d, or Form 1040NR, line 7d18a.  
18b.Enter the Federal poverty line amount as determined by the family size on line 18a and Federal poverty Table 1-1, 1-2, or 1-3 for your state of residence during 2015 in the Form 8962 instructions 18b.
19.Divide line 17 by line 18b. If the result is not a whole percentage, do not round. Use only the first two numbers after the decimal point. For example, for .9984, enter the result as 99; for 1.8565, enter the result as 185; for 3.997, enter the result as 399 19.%
 
  • If the result is less than 200, enter the amount from line 16 on line 26. Skip lines 20–25.
  • If the result is 200 or more, go to line 20.
  
20.Enter $1,500 ($750 if your filing status is single)20.
21.Subtract line 20 from line 15. If zero or less, enter -0-21.
22.Divide line 21 by line 18b. If the result is not a whole percentage, do not round. Use only the first two numbers after the decimal point. For example, for .9984, enter the result as 99; for 1.8565, enter the result as 185; for 3.997, enter the result as 399 22.%
 
  • If the result is less than 300, enter the amount from line 20 on line 26. Skip lines 23–25.
  • If the result is 300 or more, go to line 23.
  
23.Enter $2,500 ($1,250 if your filing status is single)23.
24.Subtract line 23 from line 15. If zero or less, enter -0-24.
25.Divide line 24 by line 18b. If the result is not a whole percentage, do not round. Use only the first two numbers after the decimal point. For example, for .9984, enter the result as 99; for 1.8565, enter the result as 185; for 3.997, enter the result as 399 25.%
 
  • If the result is less than 400, enter the amount from line 23 on line 26.
  • If the result is 400 or more, enter the amount from line 6 on line 26.
 
26.Enter the amount you were instructed to enter here by line 19, 22, or 25 (see instructions)26.
27.Add lines 7 and 26 27.
28.Enter the smaller of line 5 or line 27. Then go to Worksheet X28.
taxmap/pubs/p974-011.htm#en_us_publink100020668

Instructions for Worksheet W(p53)

rule
taxmap/pubs/p974-011.htm#en_us_publink100026306

Line 1.(p53)

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 must also 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 1040A or 1040), line 2.
taxmap/pubs/p974-011.htm#en_us_publink100036263

Line 4a.(p54)

rule
Include your IRA deduction on line 4a 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/p974-011.htm#en_us_publink100020676

Line 6.(p54)

rule
Enter on this line the APTC from Form 1095-A, Part III, column C, that is attributable to specified premiums on line 5.
taxmap/pubs/p974-011.htm#TXMR18de2946

Line 26.(p54)

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 (shown later). Do not enter an amount from Table 5 in the Form 8962 instructions.
taxmap/pubs/p974-011.htm#en_us_publink100026764
PencilWorksheet X. Figuring the Limit Under Section 5.03 of Revenue Procedure 2014-41
Note. If you have more than one trade or business under which a qualified health plan is established, complete lines 2–11 separately for each trade or business. Add the amounts on line 11 for all the trades or businesses. Then complete lines 12–15 once for all trades or businesses.
1.Enter the amount from Worksheet W, line 28. If you did not complete Worksheet W, enter your specified premiums. See Specified Premiums under Instructions for Worksheet P, earlier 1.
2.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 9 2.
3.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 3.
4.Divide line 2 by line 34.
5.Multiply line 27 of Form 1040 or Form 1040NR by line 45.
6.Subtract line 5 from line 26.
7.Enter the amount, if any, from line 28 of Form 1040 or Form 1040NR, attributable to the same business for which the qualified health plan is established 7.
8.Subtract line 7 from line 68.
9. 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 9.
10.Enter any amount from Form 2555, line 45, attributable to the amount entered on line 2 or line 9 above, or any amount from Form 2555-EZ, line 18, attributable to the amount entered on line 9 above 10.
 Note. If you are not filing Form 2555 or 2555-EZ, enter -0-.   
11.Subtract line 10 from line 8 or 9, whichever applies 11.
12.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 12.
13.Subtract line 12 from line 1113.
14.Enter the smaller of line 1 or line 1314.
15.Add lines 12 and 14. Then use one of the methods that follow to figure the PTC and the self-employed health insurance deduction for specified premiums 15.

*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/p974-011.htm#en_us_publink100037486

Iterative Calculation Method(p54)

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/p974-011.htm#en_us_publink100037487

Step 1(p54)

rule
Figure your adjusted gross income (AGI), modified AGI, and household income using Worksheet X, line 15, 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.
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.
  6. Domestic production activities deduction.
taxmap/pubs/p974-011.htm#en_us_publink100037488

Step 2(p55)

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.
Note.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/p974-011.htm#en_us_publink100037489

Step 3(p55)

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/p974-011.htm#en_us_publink100021783

Step 3 Worksheet
Note. Enter amounts in dollars and cents. Do not round to whole dollars.
1.Enter the amount from Worksheet W, line 5. If you did not complete Worksheet W, enter the amount from Worksheet X, line 1 1..  
 Caution: If the amounts on lines 12–23, 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 2–5 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 2015 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 14 8..  
9.Enter the smaller of line 7 or line 8. Then go to Step 4 next 9..  
taxmap/pubs/p974-011.htm#en_us_publink100036264

More than one trade or business.(p56)

rule
If you have more than one trade or business under which you established a qualified health plan, you must complete lines 1–7 separately for each trade or business. Use the following instructions to complete the Step 3 Worksheet.
taxmap/pubs/p974-011.htm#en_us_publink100030359
Line 1.(p56)
Enter the amounts for the separate trade or business.
If the Caution under line 1 applies to you, skip lines 2–5. 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.
taxmap/pubs/p974-011.htm#en_us_publink100030360
Line 2.(p56)
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 12–23, column (a), of the Step 2 Form 8962.
taxmap/pubs/p974-011.htm#en_us_publink100030361
Lines 3–6.(p56)
Complete these lines for the plan established under the separate trade or business.
taxmap/pubs/p974-011.htm#en_us_publink100030362
Line 7.(p56)
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.
taxmap/pubs/p974-011.htm#en_us_publink100030363
Lines 8–9.(p56)
Complete these lines once for all trades or businesses.
taxmap/pubs/p974-011.htm#en_us_publink100037490

Step 4(p56)

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 X, line 12, 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/p974-011.htm#en_us_publink100037491

Step 5(p56)

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.
taxmap/pubs/p974-011.htm#en_us_publink100021784

Step 5 Worksheet
Note. 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 2–5 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 14 6..  
7.Enter the smaller of line 5 or line 6. Then go to Step 6 next 7..  
taxmap/pubs/p974-011.htm#en_us_publink100036265

More than one trade or business.(p57)

rule
If you have more than one trade or business under which you established a qualified health plan, you must complete lines 1–5 separately for each trade or business. Use the following instructions to complete the Step 5 Worksheet.
taxmap/pubs/p974-011.htm#en_us_publink100030366
Line 1.(p57)
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.
taxmap/pubs/p974-011.htm#en_us_publink100030367
Line 2.(p57)
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.
taxmap/pubs/p974-011.htm#en_us_publink100030368
Line 3.(p57)
Enter the amount from the Step 3 Worksheet for the same separate trade or business for which you are completing the Step 5 Worksheet.
taxmap/pubs/p974-011.htm#en_us_publink100030369
Line 5.(p57)
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.
taxmap/pubs/p974-011.htm#en_us_publink100030370
Lines 6–7.(p57)
Complete these lines once for all trades or businesses.
taxmap/pubs/p974-011.htm#en_us_publink100037492

Step 6(p57)

rule
Answer the following 3 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 X, line 12. Enter this total on line 29 of Form 1040 or 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.
taxmap/pubs/p974-011.htm#en_us_publink100037493

Simplified Calculation Method(p57)

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.
taxmap/pubs/p974-011.htm#en_us_publink100037494

Step 1(p57)

rule
Figure your adjusted gross income (AGI), modified AGI, and household income using the total of Worksheet X, line 15, 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.
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.
  6. Domestic production activities deduction.
taxmap/pubs/p974-011.htm#en_us_publink100037495

Step 2(p57)

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.
Note.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/p974-011.htm#en_us_publink100037496

Step 3(p58)

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.
taxmap/pubs/p974-011.htm#en_us_publink100027261
Pencil
Step 3 Worksheet
1.Enter the amount from Worksheet W, line 5. If you did not complete Worksheet W, enter the amount from Worksheet X, line 1 1.
 Caution: If the amounts on lines 12–23, 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 2–5 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 2015 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 14 8.
9.Enter the smaller of line 7 or line 89.
10.Enter the amount from Worksheet X, line 12 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 Form 1040 or Form 1040NR 11.
taxmap/pubs/p974-011.htm#en_us_publink100036266

More than one trade or business.(p58)

rule
If you have more than one trade or business under which you established a qualified health plan, you must complete lines 1–7 separately for each trade or business. Use the following instructions to complete the Step 3 Worksheet.
taxmap/pubs/p974-011.htm#en_us_publink100030373
Line 1.(p58)
Enter the amounts for the separate trade or business.
If the Caution under line 1 applies to you, skip lines 2–5. 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.
taxmap/pubs/p974-011.htm#en_us_publink100030374
Line 2.(p58)
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 12–23, column (a), of the Step 2 Form 8962.
taxmap/pubs/p974-011.htm#en_us_publink100030375
Lines 3–6.(p58)
Complete these lines for the plan established under the separate trade or business.
taxmap/pubs/p974-011.htm#en_us_publink100030376
Line 7.(p58)
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 8–11.
taxmap/pubs/p974-011.htm#en_us_publink100030377
Line 8–11.(p58)
Complete these lines once for all trades or businesses.
taxmap/pubs/p974-011.htm#en_us_publink100037497

Step 4(p58)

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.
taxmap/pubs/p974-011.htm#en_us_publink100026313

Special Instructions for Self-Employed Individuals Who Claim Certain Deductions/Exclusions(p58)

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.
  6. Domestic production activities deduction.
Read the following instructions if you are claiming one 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 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 deduction. 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 W, complete Worksheet Y and follow the instructions under line 18 of that Worksheet. Skip (5).
  5. If you did not complete Worksheet W, 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, complete the Iterative Calculation Method through Step 6 or the Simplified Calculation Method through Step 3. Enter "400" on 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.
taxmap/pubs/p974-011.htm#en_us_publink100029686
PencilWorksheet Y. Refiguring Household Income, the Limitation on Additional Tax, and the Limit Under Section 5.03 of Revenue Procedure 2014-41
1.Enter the amount from Worksheet W, line 15 1.
2.Enter the deduction or exclusion2.
3.Revised household income. Subtract line 2 from line 13.
4.Enter $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 W, line 18b 6.
7.Divide line 5 by line 6. If the result is not a whole percentage, do not round. Use only the first two numbers after the decimal point. For example, for .9984, enter the result as 99; for 1.8565, enter the result as 185; for 3.997, enter the result as 399 7.%
 
  • If the result is less than 200, enter the amount from line 4 on line 14. Skip lines 8–13.
  • If the result is 200 or more, go to line 8.
  
8.Enter $1,500 ($750 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. Use only the first two numbers after the decimal point. For example, for .9984, enter the result as 99; for 1.8565, enter the result as 185; for 3.997, enter the result as 399 10.%
  • If the result is less than 300, enter the amount from line 8 on line 14. Skip lines 11-13.
  • If the result is 300 or more, go to line 11.
  
11.Enter $2,500 ($1,250 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. Use only the first two numbers after the decimal point. For example, for .9984, enter the result as 99; for 1.8565, enter the result as 185; for 3.997, enter the result as 399 13.%
 
  • If the result is less than 400, enter the amount from line 11 on line 14.
  • If the result is 400 or more, enter the amount from Worksheet W, line 6, 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 W, line 7 15.
16.Add lines 14 and 15 16.
17.Enter the smaller of line 16 above or line 5 of Worksheet W17.
18.Is line 17 above equal to line 28 of Worksheet W?
❑ Yes. Skip lines 19–21. Enter the amount from Worksheet X, line 15, on line 22 below. Then see Next under line 22 for further instructions.
❑ No. Go to line 19.
18. 
19.Enter the amount from Worksheet X, line 12 19.
20.Enter the amount from Worksheet X, line 13 20.
21.Enter the smaller of line 17 or line 2021.
22.Add lines 19 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 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 (or AGI for the domestic production activities deduction).
  • Then complete Worksheet Z, later, for the other deduction/exclusion.
    
taxmap/pubs/p974-011.htm#en_us_publink100026675
PencilWorksheet Z. Refiguring Household Income, the Limitation on Additional Tax, and the Limit Under Section 5.03 of Revenue Procedure 2014-41
Note. Complete Worksheet Y before you complete Worksheet Z.
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 $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 W, line 18b 6.
7.Divide line 5 by line 6. If the result is not a whole percentage, do not round. Use only the first two numbers after the decimal point. For example, for .9984, enter the result as 99; for 1.8565, enter the result as 185; for 3.997, enter the result as 399 7.%
 
  • If the result is less than 200, enter the amount from line 4 on line 14. Skip lines 8–13.
  • If the result is 200 or more, go to line 8.
  
8.Enter $1,500 ($750 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. Use only the first two numbers after the decimal point. For example, for .9984, enter the result as 99; for 1.8565, enter the result as 185; for 3.997, enter the result as 399 10.%
 
  • If the result is less than 300, enter the amount from line 8 on line 14. Skip lines 11–13.
  • If the result is 300 or more, go to line 11.
  
11.Enter $2,500 ($1,250 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. Use only the first two numbers after the decimal point. For example, for .9984, enter the result as 99; for 1.8565, enter the result as 185; for 3.997, enter the result as 399 13.%
 
  • If the result is less than 400, enter the amount from line 11 on line 14.
  • If the result is 400 or more, enter the amount from Worksheet W, line 6, 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 W, line 7 15.
16.Add lines 14 and 15 16.
17.Enter the smaller of line 16 above or line 5 of Worksheet W17.
18.Is line 17 above equal to line 17 of Worksheet Y?
❑ Yes. Skip lines 19–21. Enter the amount from Worksheet Y, line 22, on line 22 below. Then see Next under line 22 for further instructions.
❑ No. Go to line 19.
18. 
19.Enter the amount from Worksheet X, line 12 19.
20.Enter the amount from Worksheet X, line 13 20.
21.Enter the smaller of line 17 or line 2021.
22.Add lines 19 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 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 (or AGI for the domestic production activities deduction).
  • Then complete another Worksheet Z for the other deduction/exclusion.
taxmap/pubs/p974-011.htm#en_us_publink100020704

Illustrated Example of the Simplified Calculation Method(p62)

rule
The following example illustrates the Simplified Calculation Method.
In 2015, Carla Birch, her husband Jim, and their 2 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 page 1 of their Form 1040 (excluding line 29) consist of the following.
Jim's salary (Form 1040, line 7)$56,625
Taxable interest (Form 1040, line 8a) 419
Carla’s net profit from her business on Schedule C (Form 1040, line 12)30,000
Total income (Form 1040, line 22)87,044
Deductible part of Carla’s self-employment tax (Form 1040, line 27)2,119
Carla’s qualified retirement plan deduction (Form 1040, line 28)2,500
taxmap/pubs/p974-011.htm#en_us_publink100029670

Carla's Worksheet W(p62)

rule
Because Carla had APTC during the months of self-employment, she begins by completing Worksheet W, Parts I and III, as shown later. She skips Part II because neither one of her children is required to file a Federal income tax return for 2015.
taxmap/pubs/p974-011.htm#en_us_publink100020707

Line 1.(p62)

rule
Carla enters $87,044, which is the total income shown on line 22 of her Form 1040. Total income is the sum of Jim’s salary, taxable interest, and Carla’s net profit.
taxmap/pubs/p974-011.htm#en_us_publink100020708

Line 4a.(p62)

rule
Carla enters $4,619. This is the total of the deductible part of her self-employment tax and her qualified retirement plan deduction.
taxmap/pubs/p974-011.htm#en_us_publink100020709

Line 18b.(p62)

rule
Carla enters $23,850. This is the Federal poverty line shown in Table 1-1 in the Form 8962 instructions for a family size of 4.
taxmap/pubs/p974-011.htm#en_us_publink100029671

Carla's Worksheet X(p62)

rule
After completing Worksheet W, Carla completes Worksheet X to determine how much of the $10,300 on Worksheet W, line 28, can be used in figuring the first iteration of the PTC under the Simplified Calculation Method. She can use the full $10,300 as shown on Worksheet X, line 14.
taxmap/pubs/p974-011.htm#en_us_publink100026688
PencilCarla's Worksheet W. Figuring Household Income and the Limitation on Additional Tax
Note.Complete this worksheet only if (1) advance payments of the premium tax credit (APTC) were made to your insurer on your behalf for the months you were self-employed and (2) the APTC was paid for a plan for which you are not electing the HCTC.
Part I: Taxpayer's Modified AGI
1.Combine the amounts from:
  • Form 1040, lines 8b, 22, and the excess, if any, of line 20a over line 20b.
  • Form 1040NR, lines 9b and 23
1.87,044
 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 23.87,044
4a.Enter the total of the amounts from:
  • Form 1040, lines 23 through 28, 30, and 31a, plus any write-in adjustments you entered on the dotted line next to line 36.
  • Form 1040NR, lines 24 through 28, 30, and 31, plus any write-in adjustments you entered on the dotted line next to line 35
4a.4,619
 Note. See instructions if you made contributions to a traditional IRA.   
4b.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 4b.
5.Enter specified premiums (see Specified Premiums under Instructions for Worksheet P, earlier) 5.12,000
6.Enter APTC attributable to the premiums on line 5 (see instructions)6.4,200
7.Subtract line 6 from line 57.7,800
8.Add lines 4a, 4b, and 78.12,419
9.Subtract line 8 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 9.74,625
Part II: Dependents’ Modified AGI
Note. Lines 10–14 of this part are omitted because Carla's dependent children are not required to file Federal tax returns.
Part III: Limitation on Additional Tax
15.Household income. Add lines 9 and 1415.74,625
16.Enter $600 ($300 if your filing status is single)16.600
17.Subtract line 16 from line 15. If zero or less, enter -0-17.74,025
18a.Enter the number of exemptions from Form 1040, line 6d, or Form 1040NR, line 7d18a.4  
18b.Enter the Federal poverty line amount as determined by the family size on line 18a and Federal poverty Table 1-1, 1-2, or 1-3 for your state of residence during 2015 in the Form 8962 instructions 18b.23,850
19.Divide line 17 by line 18b. If the result is not a whole percentage, do not round. Use only the first two numbers after the decimal point. For example, for .9984, enter the result as 99; for 1.8565, enter the result as 185; for 3.997, enter the result as 399 19.310%
 
  • If the result is less than 200, enter the amount from line 16 on line 26. Skip lines 20–25.
  • If the result is 200 or more, go to line 20.
  
20.Enter $1,500 ($750 if your filing status is single)20.1,500
21.Subtract line 20 from line 15. If zero or less, enter -0-21.73,125
22.Divide line 21 by line 18b. If the result is not a whole percentage, do not round. Use only the first two numbers after the decimal point. For example, for .9984, enter the result as 99; for 1.8565, enter the result as 185; for 3.997, enter the result as 399 22.306%
 
  • If the result is less than 300, enter the amount from line 20 on line 26. Skip lines 23–25.
  • If the result is 300 or more, go to line 23.
  
23.Enter $2,500 ($1,250 if your filing status is single)23.2,500
24.Subtract line 23 from line 15. If zero or less, enter -0-24.72,125
25.Divide line 24 by line 18b. If the result is not a whole percentage, do not round. Use only the first two numbers after the decimal point. For example, for .9984, enter the result as 99; for 1.8565, enter the result as 185; for 3.997, enter the result as 399 25.302%
 
  • If the result is less than 400, enter the amount from line 23 on line 26.
  • If the result is 400 or more, enter the amount from line 6 on line 26.
 
26.Enter the amount you were instructed to enter here by line 19, 22, or 2526.2,500
27.Add lines 7 and 26.27.10,300
28.Enter the smaller of line 5 or line 27. Then go to Worksheet X28.10,300
taxmap/pubs/p974-011.htm#en_us_publink100026765
PencilCarla's Worksheet X. Figuring the Limit Under Section 5.03 of Revenue Procedure 2014-41
1.Enter the amount from Worksheet W, line 28. If you did not complete Worksheet W, enter your specified premiums. See Specified Premiums under Instructions for Worksheet P, earlier 1.10,300
2.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 9 2.30,000
3.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 3.30,000
4.Divide line 2 by line 34.1.0
5.Multiply line 27 of Form 1040 or Form 1040NR by line 45.2,119
6.Subtract line 5 from line 26.27,881
7.Enter the amount, if any, from line 28 of Form 1040 or Form 1040NR, attributable to the same business for which the qualified health plan is established 7.2,500
8.Subtract line 7 from line 68.25,381
9. 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 9.
10.Enter any amount from Form 2555, line 45, attributable to the amount entered on line 2 or line 9 above, or any amount from Form 2555-EZ, line 18, attributable to the amount entered on line 9 above 10.0
 Note. If you are not filing Form 2555 or 2555-EZ, enter -0-.   
11.Subtract line 10 from line 8 or 9, whichever applies 11.25,381
12.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 12.
13.Subtract line 12 from line 1113.25,381
14.Enter the smaller of line 1 or line 1314.10,300
15.Add lines 12 and 14. Then use one of the methods that follow to figure the PTC and the self-employed health insurance deduction for specified premiums 15.10,300

*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/p974-011.htm#en_us_publink100029675

The Simplified Calculation Method for Carla(p64)

rule
taxmap/pubs/p974-011.htm#en_us_publink100020714

Step 1.(p64)

rule
Carla figures her AGI, modified AGI, and household income using $10,300 as the self-employed health insurance deduction. (She does not enter $10,300 on Form 1040, line 29.) Her AGI is $72,125, figured as follows.
Total income from Form 1040, line 22 $87,044
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 15(10,300)
Equals: AGI72,125
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 $72,125, the same as her AGI figured in this Step 1.
taxmap/pubs/p974-011.htm#en_us_publink100020716

Step 2.(p64)

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 ($5,105) to figure the self-employed health insurance deduction in Step 3, later. She does not attach this Form 8962 to her tax return.
taxmap/pubs/p974-011.htm#en_us_publink100020717

Step 3.(p64)

rule
Carla completes the following worksheet to figure the self-employed health insurance deduction she will enter on Form 1040, line 29.
taxmap/pubs/p974-011.htm#en_us_publink100027264
Pencil
Carla's Step 3 Worksheet
1.Enter the amount from Worksheet W, line 5. If you did not complete Worksheet W, enter the amount from Worksheet X, line 1 1.12,000
 Caution: If the amounts on lines 12–23, 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 2–5 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 2.5,105
3.Enter the number of months in 2015 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 26.5,105
7.Subtract line 6 from line 17.6,895
8.Enter the amount from Worksheet X, line 14 8.10,300
9.Enter the smaller of line 7 or line 89.6,895
10.Enter the amount from Worksheet X, line 12 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 Form 1040 or Form 1040NR 11.6,895
taxmap/pubs/p974-011.htm#en_us_publink100021789

Step 4.(p65)

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 $75,530, figured as follows.
taxmap/pubs/p974-011.htm#en_us_publink100021790
Pencil
Total income from Form 1040, line 22 $87,044
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(6,895)
Equals: AGI75,530
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 $75,530, the same as her AGI figured above.
Carla completes Form 8962 through line 26. She enters the amount from line 26 ($579) on Form 1040, line 69, and attaches Form 8962.
taxmap/pubs/p974-011.htm#en_us_publink100021858

taxmap/pubs/p974-011.htm#en_us_publink100021859
taxmap/pubs/p974-011.htm#en_us_publink100027273

taxmap/pubs/p974-011.htm#en_us_publink100027274