Allocation for ACA, I'm officially late for my taxes and freaking out.... HELP

[Level-With-Me 12]

I'm going to try to explain this situation the best I can, please bear with me as I'm on very few hours of sleep - I'll be happy to clarify anything that doesn't make sense.

I'm a W2 employee as well as 1099'd from a couple places as I work in Real Estate and also do home valuations for banks on the side. My taxes every year are already hard enough, but this year after I've gotten married has been a NIGHTMARE.  My husband and I got married on 12/11/24 in order to stay within the legal timeframe that a K1 visa calls for - so RIGHT at the end of the year. Because it's recommended that I file married filing jointly, they view his income as both our income all year... but I digress.  I do rely on ACA and have since it first came out in 2014.  It's always been a struggle at tax time due to my 1099 income, not knowing how much I'm actually going to make that year. Sometimes, I do have to pay a penalty for exceeding my advance premium tax credit for making too much.  This never really bothers me too much, as every time this happens, my refund from my W2 income just gets lessened and I've never had to really dig into my bank account to pay it back - yes I realize my refund is my money and I shouldn't look at it that way - however, after my write offs from 1099's, I'm usually looking at owing every year and 9 times out of 10, a good year for me is getting a couple hundred dollars back, or settling around $0 refund. 

Enter my husband and his income.... he moved here at the end of September last year, and received his last paycheck on the day he flew over. He comes from Jersey, which is a small island between the UK and France. Since I usually owe on taxes (which I pay out of my refund) I'm one of those who waits to the last minute to do my taxes because I never usually have a refund to look forward to... and the government shouldn't get my money any earlier than necessary.  Big mistake this year. I never realized just how messed up the government views marriage when filing jointly for the first time, especially with a husband from across the world. In the beginning of April I requested that my husband get me a copy of his last paycheck which would show his YTD and his taxes paid for the 2024 year. Of course, our government wants to verify that he paid his taxes on his income... that he made in Jersey. I started with my tried and true H&R Block Deluxe, which I use every year. Everything was going smoothly until I got toward the end and after I input my info for ACA, my small refund turned into owing nearly 2K. My heart sank.  After further research, and lots of googling and frantically turning to ChatGPT, I learned that my version of H&R Block doesn't allow you allocate your ACA payments - basically it's looking at our "combined" income and saying WOAH, you REALLY underestimated your income for this year, so now we have to charge you $1900 for your underpayment (Keep in mind, ACA repayments are capped by increments - more on that later).  However, there is a form that allows you to "allocate" your payments which allows you to show that your combined income didn't start until the end of the year, and that they should only be looking at your income from January to November, and when it comes to December, that's when they can ding you a bit and charge you a little extra. Anyways, H&R Block DOES have this form, but it's only accessible when you open your forms an check a box saying you want to allocate and do manual calculations. When you try to click it, you get an error saying that you can't e-file when you do a manual override. This wasn't an option for me as I did not have time to do this manually (the manual calculations are a nightmare and I could never trust that I did the equation properly, and then submit it by mail and hope I did it right).

I then moved on to FreeTaxUSA... this one claimed to support the ACA allocation - HOWEVER, when I got to the foreign tax credit (form 1116) I was told their software only supported foreign tax credit when the foreign income and taxes are reported on a K1, 1099-int, or form 1099-div.  I had NO idea what this meant.. and I was running out of time.. so I moved on to Tax Slayer (all of this drama was between Friday night and last night).  Tax Slayer was going great... not as user friendly as I would've liked... it definitely took me the longest to fill out.... so, by last night, I got to the ACA section.  I input all the info, I did the prompts step by step as far as what I should be inputting according to heavy research/google/ChatGPT, I checked off that I needed and got to the end.  Somehow this time around it was saying I owed nearly $1500.  I opened my preliminary docs before finalizing and it was still showing my ACA repayment was $1900.  According to my FPL of about 250%, my ACA repayment should be capped at $1000.  According to ChatGPT (we became close friends recently), TaxSlayer's software did not calculate my ACA repayment properly based on my FPL %.  And for those who are probably weary of ChatGPT, please know that did hours of due diligence on my own - including finding the federal chart directly from the government and verify that my FPL % was in fact capped at a repayment of $1,000.  I called TaxSlayer support, and the first lady said "oh you need to calculate these numbers differently in these 3 boxes" so I thought - great, I'll change these numbers and it'll change the repayment amount. It didn't.  I tried to call them back, was hung up on several times due to "high call volume" and the next lady I got was totally hands off and told me that she couldn't help me with calculations or readjust calculations that the software was getting wrong. 

So I cried a bit, and around 10PM last night did a last ditch effort over at TaxAct.  ChatGPT did assure me that it did support the ACA allocation, however at 11:59PM when I was 98% done, I couldn't find anywhere to allocate... anywhere. It told me to search for form 8962 V, nothing. I was a blubbering mess. I was/am so tired. I missed the deadline, and now I'm going to probably be paying a huge late fee. 

 

My last hope is TurboTax.  I'm almost afraid to ask because sometimes when you're having an issue this big, it feels like you're the only one who's facing said issue. But my hope is that someone lovely and kind here can assure me that spending $50+ on TurboTax deluxe WILL support both the 1116 form and the 8962 allocation.  OR Maybe... someone has used one of the MANY programs I've tried to use and guide me in the right direction for these issues.  I'm desperate! 

 

If you've made it this far...... thank you 

[Boiler 46,757]

I use FreeTax USA

 

I would not have thought he earned anything last year if he came at the end of September, you married you filed, when did he get his EAD?

[MMRF 34]

I'm having trouble following all this text-perhaps you can post a 1 line TLDR to summarize the question.

 

I think you're asking about your healthcare tax credit. There's a IRS form to adjust for all the months you weren't married. https://www.irs.gov/forms-pubs/about-form-8962

[Level-With-Me 12]

50 minutes ago, Boiler said:

I use FreeTax USA

 

I would not have thought he earned anything last year if he came at the end of September, you married you filed, when did he get his EAD?

He earned all his foreign income in Jersey, however since we're filing married jointly, all his income counts as joint income since when you file a joint as married, all your income even if it was earned in a different country counts as joint income since they look at you as a full year resident. I'm not sure why this is, but according to the IRS if you were here for one month or 11 months you're considered as a full year resident. 

[Level-With-Me 12]

19 minutes ago, MMRF said:

I'm having trouble following all this text-perhaps you can post a 1 line TLDR to summarize the question.

 

I think you're asking about your healthcare tax credit. There's a IRS form to adjust for all the months you weren't married. https://www.irs.gov/forms-pubs/about-form-8962

Yes I'm aware of the form, I'm trying to e-file and doing the form manually does not allow for e-filing. My frustration comes into play where all these tax programs state they can help calculate for the months you're not married, but still isn't properly calculating my repayment owed for "overpaying" to the ACA. There are caps based on your level on the federal poverty line. My cap should be $1,000. But the programs aren't calculating that correctly and stating that I need to pay back $1,900. 

[MMRF 34]

15 minutes ago, Level-With-Me said:

Yes I'm aware of the form, I'm trying to e-file and doing the form manually does not allow for e-filing. My frustration comes into play where all these tax programs state they can help calculate for the months you're not married, but still isn't properly calculating my repayment owed for "overpaying" to the ACA. There are caps based on your level on the federal poverty line. My cap should be $1,000. But the programs aren't calculating that correctly and stating that I need to pay back $1,900. 

Either file by mail or talk to a real accountant.

[MalloryCat 552]

as someone who was in almost the same situation (minus the ACA stuff)

i had zero luck with any tax software working correctly and ended up just paying someone at H&R Block to do if for me

the confusion of the foreign income plus filing as MFJ for the first time was not worth trying to get through myself. was 100% worth the like $250 i spent.

probably not what you wanna hear, but for this year (next year will probably be easier as no foreign income to consider) it is probably just easier and less stressful to pay someone else to deal with it lol

 

good luck!

[Lance27 30]

You can file a tax extension online. Also as someone who almost always owes $$, I usually gather all my tax documents and prepare my taxes usually in March and then file them right at April 12 or 13 with my payment. Trust me it will make your life a lot less stressful.

[NorthByNorthwest 430]

4 hours ago, Level-With-Me said:

So I cried a bit, and around 10PM last night did a last ditch effort over at TaxAct.  ChatGPT did assure me that it did support the ACA allocation, however at 11:59PM when I was 98% done, I couldn't find anywhere to allocate...

 

I sympathize with the challenges, but I stress this to everyone when I get the chance: DO NOT RELY ON CHATGPT FOR QUESTIONS ABOUT FACTUAL INFORMATION. That is not what an LLM is for, it predicts which words should follow each other based on the prompt. It can get facts right, but it will happily tell you something that is not true at all, especially if you ask it something outside the data set it has been trained on.

[yuna628 9,812]

I would strongly encourage to stop using ChatGPT and to consult a CPA.

[Timefliesby_not 13]

Echoing what others said. Worth getting an expert for the first year. When I moved over I had income from a job in my home country and my wife and I ended up filing as married filing separately as I had to file a dual status return. I ended up not paying any US taxes on my foreign income but had to go through all the paperwork.

[Scandi 4,256]

12 hours ago, Level-With-Me said:

He earned all his foreign income in Jersey, however since we're filing married jointly, all his income counts as joint income since when you file a joint as married, all your income even if it was earned in a different country counts as joint income since they look at you as a full year resident. I'm not sure why this is, but according to the IRS if you were here for one month or 11 months you're considered as a full year resident. 

Up to you, but we didn't mention my income from my home country when we filed jointly. Our tax guy just put $0 on me. He also listed me as a "non-resident" (or however to explain it) for the health insurance penalty thingy so we wouldn't get a fine for me not having health insurance yet. I "technically" wasn't a resident yet, I had only arrived in a K-1 a few months earlier and didn't have any status in the US.

No issues. 

[VinnyH 67]

I read everything, and although I cannot really help you with your issue, I have a couple of thoughts/comments:

 

- file a deadline extension ASAP

- talk with a CPA in person, or do walk-in/scheduled appointment at an HR Block center

- not sure if this is specific with TurboTax (which I have been since 2010), I always do my taxes as soon as I can (in early February after I receive all tax forms and W-2): if I get a refund, I get it right away, if I owe money, I always schedule the money to be taken out of my checking account on April 15. That way, no last minute surprise or stress for me. Hope you can do that going forward.

 

Good luck with your situation!

[PGA 294]

23 hours ago, Level-With-Me said:

I'm going to try to explain this situation the best I can, please bear with me as I'm on very few hours of sleep - I'll be happy to clarify anything that doesn't make sense.

I'm a W2 employee as well as 1099'd from a couple places as I work in Real Estate and also do home valuations for banks on the side. My taxes every year are already hard enough, but this year after I've gotten married has been a NIGHTMARE.  My husband and I got married on 12/11/24 in order to stay within the legal timeframe that a K1 visa calls for - so RIGHT at the end of the year. Because it's recommended that I file married filing jointly, they view his income as both our income all year... but I digress.  I do rely on ACA and have since it first came out in 2014.  It's always been a struggle at tax time due to my 1099 income, not knowing how much I'm actually going to make that year. Sometimes, I do have to pay a penalty for exceeding my advance premium tax credit for making too much.  This never really bothers me too much, as every time this happens, my refund from my W2 income just gets lessened and I've never had to really dig into my bank account to pay it back - yes I realize my refund is my money and I shouldn't look at it that way - however, after my write offs from 1099's, I'm usually looking at owing every year and 9 times out of 10, a good year for me is getting a couple hundred dollars back, or settling around $0 refund. 

Enter my husband and his income.... he moved here at the end of September last year, and received his last paycheck on the day he flew over. He comes from Jersey, which is a small island between the UK and France. Since I usually owe on taxes (which I pay out of my refund) I'm one of those who waits to the last minute to do my taxes because I never usually have a refund to look forward to... and the government shouldn't get my money any earlier than necessary.  Big mistake this year. I never realized just how messed up the government views marriage when filing jointly for the first time, especially with a husband from across the world. In the beginning of April I requested that my husband get me a copy of his last paycheck which would show his YTD and his taxes paid for the 2024 year. Of course, our government wants to verify that he paid his taxes on his income... that he made in Jersey. I started with my tried and true H&R Block Deluxe, which I use every year. Everything was going smoothly until I got toward the end and after I input my info for ACA, my small refund turned into owing nearly 2K. My heart sank.  After further research, and lots of googling and frantically turning to ChatGPT, I learned that my version of H&R Block doesn't allow you allocate your ACA payments - basically it's looking at our "combined" income and saying WOAH, you REALLY underestimated your income for this year, so now we have to charge you $1900 for your underpayment (Keep in mind, ACA repayments are capped by increments - more on that later).  However, there is a form that allows you to "allocate" your payments which allows you to show that your combined income didn't start until the end of the year, and that they should only be looking at your income from January to November, and when it comes to December, that's when they can ding you a bit and charge you a little extra. Anyways, H&R Block DOES have this form, but it's only accessible when you open your forms an check a box saying you want to allocate and do manual calculations. When you try to click it, you get an error saying that you can't e-file when you do a manual override. This wasn't an option for me as I did not have time to do this manually (the manual calculations are a nightmare and I could never trust that I did the equation properly, and then submit it by mail and hope I did it right).

I then moved on to FreeTaxUSA... this one claimed to support the ACA allocation - HOWEVER, when I got to the foreign tax credit (form 1116) I was told their software only supported foreign tax credit when the foreign income and taxes are reported on a K1, 1099-int, or form 1099-div.  I had NO idea what this meant.. and I was running out of time.. so I moved on to Tax Slayer (all of this drama was between Friday night and last night).  Tax Slayer was going great... not as user friendly as I would've liked... it definitely took me the longest to fill out.... so, by last night, I got to the ACA section.  I input all the info, I did the prompts step by step as far as what I should be inputting according to heavy research/google/ChatGPT, I checked off that I needed and got to the end.  Somehow this time around it was saying I owed nearly $1500.  I opened my preliminary docs before finalizing and it was still showing my ACA repayment was $1900.  According to my FPL of about 250%, my ACA repayment should be capped at $1000.  According to ChatGPT (we became close friends recently), TaxSlayer's software did not calculate my ACA repayment properly based on my FPL %.  And for those who are probably weary of ChatGPT, please know that did hours of due diligence on my own - including finding the federal chart directly from the government and verify that my FPL % was in fact capped at a repayment of $1,000.  I called TaxSlayer support, and the first lady said "oh you need to calculate these numbers differently in these 3 boxes" so I thought - great, I'll change these numbers and it'll change the repayment amount. It didn't.  I tried to call them back, was hung up on several times due to "high call volume" and the next lady I got was totally hands off and told me that she couldn't help me with calculations or readjust calculations that the software was getting wrong. 

So I cried a bit, and around 10PM last night did a last ditch effort over at TaxAct.  ChatGPT did assure me that it did support the ACA allocation, however at 11:59PM when I was 98% done, I couldn't find anywhere to allocate... anywhere. It told me to search for form 8962 V, nothing. I was a blubbering mess. I was/am so tired. I missed the deadline, and now I'm going to probably be paying a huge late fee. 

 

My last hope is TurboTax.  I'm almost afraid to ask because sometimes when you're having an issue this big, it feels like you're the only one who's facing said issue. But my hope is that someone lovely and kind here can assure me that spending $50+ on TurboTax deluxe WILL support both the 1116 form and the 8962 allocation.  OR Maybe... someone has used one of the MANY programs I've tried to use and guide me in the right direction for these issues.  I'm desperate! 

 

If you've made it this far...... thank you 

Ok. I'm going to keep this short. My wife, the beneficiary, moved to the US in December 2022. In January she received a job offer which she accepted - it offered very few benefits. We signed her up for ACA. After reading the information about the program, me, with an advanced degree, had difficulty figuring it out. First, there seemed to be little information provided on what the tax consequences would be if A happened or B happened. That made me suspicious right away. There was absolutely no way to figure the tax burden without knowing a ton of information that wasn't available. I immediately told my wife that we needed to put money aside each month to cover the full premiums because, as any American knows, or SHOULD know, government programs or government subsidized programs sound great on the sale but are never as good as what you were sold. 

 

In October of 2024, my wife changed jobs. It had great benefits, including health and I was ecstatic. I was dancing on the roof with glee because she was no longer on that awful ACA. 

 

Now, I predicted it would happen and it did. I was grateful we put that money aside for the premiums because at tax time came the screw job from the government. For only 10 months of ACA our taxes skyrocketed and only because of the ACA. I was hoping at first it was a mistake, sweating, and waiting for every tax document to arrive; I ran all through FreeTax, TaxSlayer, TurboTax: all came back with the same result. 

 

If you do meet with a CPA and he/she tells you that the calculation is wrong, please update as I would certainly be willing to file an amended return for my wife and I. However, and most importantly, I really want to make clear to everyone, when the government subsidizes something it is very rarely a good outcome for the taxpayer and you need to prepare for what will come down the road.

[PGA 294]

Just to add: we filed with FreeTax USA because it was the only one of the three that was, in fact, free (if you didn't need to file a state return and being in Florida we didn't have that issue).