Due to having withdrawn money from IRA to purchase a home, I had to repay the entire Premium Tax Credit in the amount of $15,000.00 when I filed my taxes in February 2018.

Can I deduct the entire $15,000 when I file this year?

  • 1
    Are you self employed? – quid Jan 30 '19 at 8:27

I guess this was because the withdrawal put you over 400% of the Federal Poverty Level (FPL). Too bad it wasn't a Roth IRA open at least 5 years :-)

If you received excess APTC (Advance Premium Tax Credit) in 2017 and had to repay it (when filing in early 2018) it counts as a medical expense on your 2017 return. For most people this means a Schedule A deduction if you itemize (and exceed the 7.5% floor). As @quid hints, health insurance for self-employed is handled differently, but Is "premium tax credit repayment" deductible as health insurance cost for self-employed? got an answer from the IRS that it works similarly for this case.

Note the links in that question are to the web version of pub 502 which changes every year and is already updated for 2018, although this point hasn't changed. If you need to confirm, prior-year publications are available in PDF at https://www.irs.gov/forms-pubs-prior-search?search=502

You can amend for a refund up to 3 years from the filing deadline (or actual filing if later, or 2 years from payment if later, but it doesn't sound like those apply to you).

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  • I thought the Medical Deduction floor was 10%. Is it different in this specific case? – ab2 Jun 29 '19 at 18:31
  • @ab2: TCJA (in Dec. '17) made it 7.5% for 2017 and 2018 and 10% starting in 2019. (Until the next time it's changed.) – dave_thompson_085 Jun 30 '19 at 18:22
  • (@ab2) and guess what: Dec. 20 2019 Congress extended the medical floor of 7.5% retroactively for 2019, and also for 2020. IRS reissued already-published schedule A and its instructions with this item removed from the What's New section, so I didn't notice it until I saw the forms-errata item for 2020 W-2. – dave_thompson_085 Feb 24 at 13:41
  • Thanks, but Oh, darn! I was looking forward to not having to bother with med deductions for 2019 (and 2020) and avoiding AMT. But, thanks again. – ab2 Feb 25 at 1:59

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