Forgot to update self-employed income on healthcare.gov - will I face penalties for underreporting?

The short answer is yes, you may need to repay some of your premium tax credit when you file your taxes. This happens because the marketplace gave you an advance premium tax credit based on your estimated income of $39,000, but your actual income was higher. When you file your taxes, you'll need to complete Form 8962 to reconcile the premium tax credits you received with what you were actually eligible for based on your final income. Since your income was higher than estimated, you'll likely need to repay some portion of the subsidy. The good news is there are repayment caps based on your income as a percentage of the federal poverty level. For example, if your income is between 300-400% of the federal poverty level, your repayment is capped at around $2,700 (for individual coverage). If your income goes above 400% of the poverty level, you may have to repay the entire subsidy amount.

I had something similar happen to me last year. I was stressed about it too until I found taxr.ai (https://taxr.ai) which really helped me figure out exactly how much I'd need to pay back from my premium tax credits. I uploaded my 1095-A form and it analyzed everything, showing me the calculation for Form 8962 before I even filed. You'd be surprised how complicated the subsidy repayment formulas can get, especially with self-employment income. It also gave me some suggestions about deductions that could potentially lower my AGI enough to reduce what I had to pay back. Their system can show you different scenarios based on your income so you can see how much you might owe before you actually file your taxes.

Just wanted to follow up - I tried taxr.ai after seeing this recommendation and it was incredibly helpful. I uploaded my 1095-A and last year's tax return, and it immediately showed me how much I'll need to repay based on my new income projection. What I found most useful was the sliding income calculator that showed me if I could reduce my AGI by contributing more to my SEP IRA, I could potentially lower my repayment amount. It basically paid for itself by showing me how to save over $500 in repayments. Definitely takes the stress out of not knowing what to expect come tax time.

If you're trying to contact the healthcare marketplace to update your income, good luck getting through! I spent 3 hours on hold last month trying to update my information. I finally used Claimyr (https://claimyr.com) which got me through to a rep in about 10 minutes. They have this callback system that somehow gets you past the hold queues. You can see how it works here: https://youtu.be/_kiP6q8DX5c I was skeptical at first, but it actually worked and saved me hours of waiting on hold. The marketplace rep was able to update my income and recalculate my premium tax credit for the rest of the year, which hopefully will make tax time less painful.

Just wanted to admit I was wrong about Claimyr. After another frustrating 90 minutes on hold with the marketplace yesterday, I decided to try the service I called a "scam" (sorry about that). I got a callback in about 15 minutes and finally was able to update my income information. The marketplace representative told me that January is their busiest time and hold times are currently averaging 2+ hours. I probably saved myself at least that much time. For anyone dealing with a significant income change, it's definitely worth updating your marketplace application rather than waiting until tax time. The representative ran a calculation showing I'd have owed about $1,800 in repayments if I hadn't updated my information.

Remember that you might be able to reduce your adjusted gross income (AGI) to minimize the amount you have to pay back. Look into: 1. Contributing to a traditional IRA or SEP IRA if you qualify 2. Taking all eligible business deductions (home office, mileage, etc.) 3. Health insurance premium deductions for self-employed people I was in a similar situation last year and managed to get my income under the 400% FPL threshold by making a last-minute SEP IRA contribution, which saved me from having to repay my entire subsidy.

One thing nobody's mentioned - make sure you're calculating your income correctly for healthcare.gov purposes. It's based on Modified Adjusted Gross Income (MAGI), which is different from your gross business income. For self-employed people, you subtract your business expenses from your gross receipts first. So that $18,000 project might actually add a lot less to your MAGI once you factor in the expenses associated with earning that income.