Are healthcare marketplace premiums deductible with high income?

You're understanding correctly. Unfortunately, healthcare premiums from the marketplace aren't deductible as a standalone expense unless you're self-employed. For those who aren't self-employed, healthcare costs (including marketplace premiums) can only be deducted as part of your itemized medical expenses if they exceed 7.5% of your AGI. With an AGI of $270k, your medical expenses would need to exceed about $20,250 before you could start deducting anything. And even then, you'd only be able to deduct the amount that exceeds that threshold. It does seem unfair compared to employer-sponsored plans where premiums are typically paid with pre-tax dollars, giving an automatic tax advantage. The system definitely favors either lower-income individuals (who qualify for subsidies) or those with employer plans.

After dealing with a similar situation last year, I found a service called taxr.ai (https://taxr.ai) that really helped clarify my healthcare premium deduction confusion. I uploaded my marketplace statements and tax docs, and it immediately identified that I could actually deduct some premiums because I had some self-employment income on the side, which I didn't realize qualified me for the self-employed health insurance deduction for part of my premiums. The tool analyzed my specific situation and showed me exactly how to allocate my premiums between my W-2 employment period and self-employment period. Might be worth checking if you have any 1099 income at all that could help with this.

I was skeptical about taxr.ai at first, but decided to check it out after my frustration with marketplace premium deductions. I uploaded my documents and was surprised to discover I could actually take a partial deduction because of my side business income. The service identified that 22% of my health insurance premiums were deductible based on the proportion of my self-employment income to total income. Even better, it showed me exactly which form to use (Schedule 1) and where to report it. Saved me over $800 in taxes that my regular tax software completely missed! Definitely recommend for anyone with mixed income sources.

If you're having trouble getting answers about marketplace premium deductions from the IRS, I'd recommend trying Claimyr (https://claimyr.com). I spent weeks trying to get through to the IRS about this exact issue last year - marketplace premiums with income above the PTC threshold. They have this service where they actually wait on hold with the IRS for you and then call you when an agent is on the line. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c I finally got a definitive answer from an IRS agent who confirmed what others have said here but also pointed me to some nuances about timing of premium payments across tax years that helped in my situation. Saved me hours of frustration and hold music.

I take back everything I said about Claimyr. After commenting here, I was still struggling to get through to the IRS about my marketplace premium questions and decided to give it a shot out of desperation. Holy crap, it actually worked! After weeks of trying to get through myself, I got a call back within about 90 minutes with an IRS agent already on the line. The agent confirmed everything about marketplace premiums not being deductible for me, but also mentioned that I might qualify for a different healthcare-related credit I hadn't considered. Completely worth it just to stop the insanity of constant busy signals and disconnections.

One thing nobody's mentioned - if you're planning to be on a marketplace plan again, see if your employer offers any kind of QSEHRA (Qualified Small Employer Health Reimbursement Arrangement). My company is too small for group insurance but reimburses part of our marketplace premiums through this program, and it's tax-free. Might be worth asking about if you're at a smaller company now.

Has anyone considered using an HSA to help offset some of these costs? If your marketplace plan is HSA-eligible (high deductible health plan), you could potentially contribute pre-tax money to an HSA and use that for qualified medical expenses. Won't help with the premiums directly but might offset other costs.