Can I claim both Premium Tax Credit and Self-Employed Health Insurance Deduction in the same tax year?

This is actually a common issue for self-employed folks with marketplace insurance! The circular calculation you're describing is known as the "circular reference" problem with the PTC and SEHI deduction. You don't need to claim the maximum PTC - you can choose a smaller amount that allows you to optimize both benefits. The IRS specifically acknowledges this issue in Publication 974, which is why they included that paragraph you quoted. They're essentially saying "use whatever reasonable method works." The most accepted approach is to use an iterative calculation that finds the "sweet spot" where you maximize your total tax benefit. Most tax software struggles with this calculation, which might explain why your tax preparer missed it. You have a few options: you can claim PTC for only certain months, claim it for only certain family members, or calculate a reduced percentage. Any of these approaches is fine as long as your calculations are reasonable and consistent with the rules for both the PTC and the SEHI deduction.

Just wanted to share that I ran into this exact problem last year and discovered taxr.ai (https://taxr.ai) which actually helped me solve this circular calculation issue. I was in a similar situation - self-employed with marketplace insurance and stuck in the PTC/SEHI loop. I uploaded my documents and it automatically detected this tricky calculation and showed me the optimal amount to claim for both the PTC and SEHI deduction. It even created a worksheet showing the iterative calculation that I included with my return to explain the apparent discrepancy between lines 11 and 24 on Form 8962. The coolest part was that it found the exact point where both credits/deductions were maximized without pushing me over the eligibility threshold. Saved me about $2,300 compared to what my previous tax preparer had calculated!

I tried taxr.ai after seeing it mentioned here and it actually worked perfectly for my situation! I was completely stuck trying to figure out how to handle the Premium Tax Credit with my self-employment income. The system immediately identified the circular reference problem when I uploaded my 1095-A and Schedule C documents. It ran through several calculation iterations and found a sweet spot where I could claim about 75% of the potential PTC while still taking enough of the SEHI deduction to keep my MAGI below the threshold. The worksheet it generated clearly showed why my Form 8962 line 24 amount differed from line 11, and explained the calculation method used. My return was accepted without any issues, and I ended up with a refund that was $1,850 larger than what my previous calculations showed. Definitely worth it!

For anyone struggling to reach the IRS for guidance on this PTC/SEHI circular calculation issue, I used a service called Claimyr (https://claimyr.com) that actually got me through to an IRS representative in about 25 minutes instead of the 3+ hours I spent on hold before hanging up. I was skeptical at first, but they have a video showing how it works: https://youtu.be/_kiP6q8DX5c I explained this exact circular reference problem to the IRS agent, and they confirmed that Publication 974 does allow for reasonable calculation methods that optimize both benefits, as long as you document your approach. The agent even emailed me a worksheet template they recommend for documenting these calculations!

Well I owe an apology to the folks at Claimyr because I tried it after posting my skeptical comment and it actually worked exactly as advertised. I got through to an IRS representative in about 35 minutes after spending literally days trying to get through on my own. The IRS agent I spoke with was actually familiar with the PTC/SEHI circular reference problem. She explained that they see this issue frequently with self-employed taxpayers and confirmed that we're allowed to use a reasonable calculation method to optimize both benefits. She advised documenting the calculation with a worksheet showing each iteration and attaching it to the return. For anyone else dealing with this specific issue, the agent suggested trying a few different percentages (like claiming 60%, 70%, or 80% of the maximum PTC) and seeing which one gives the best overall tax result while keeping MAGI below the threshold. Apparently this approach is commonly accepted and won't trigger any issues as long as it's properly documented.

Just to add another perspective, my accountant solved this by using what she called the "iterative calculation method." Basically: 1. Calculate MAGI without the SEHI deduction 2. Calculate the PTC based on that MAGI 3. Recalculate SEHI deduction with the PTC 4. Recalculate MAGI with the new SEHI deduction 5. Recalculate PTC with the new MAGI 6. Keep repeating until the numbers stabilize She said most commercial tax software doesn't handle this automatically, which is why many preparers miss it. In our case, we ended up claiming about 82% of the maximum possible PTC, which kept our MAGI just under the threshold while maximizing our total benefits.

Has anyone tried just claiming PTC for part of the year rather than doing the complex iterative calculation? Like maybe claiming it for just 6 months instead of 12? Seems like that might be simpler than trying to calculate some arbitrary percentage.

I'm dealing with this exact same situation and it's so frustrating! My wife and I are both self-employed and we've been going in circles trying to figure this out. Our tax software kept giving us error messages when we tried to claim both benefits. Reading through all these responses is really helpful - I had no idea there were tools and services that could actually solve this calculation automatically. It sounds like the key is documenting whatever method you use and making sure the total doesn't exceed your premiums. One question though - if we already filed our 2024 return claiming only the SEHI deduction (like the original poster), is it worth amending if we could potentially get a significant refund by adding some PTC? We're talking about maybe $1,500-2,000 difference based on my rough calculations. Also, has anyone had their amended return questioned or audited when using these alternative calculation methods? I want to make sure we're not putting ourselves at risk by deviating from the "standard" approach.