FreeTaxUSA issue with Self-Employed Health Insurance (SEHI) deduction - found huge difference

Thanks for confirming this! I'm still confused about why FreeTaxUSA wouldn't automatically calculate this though - it seems like a pretty standard situation that many self-employed people would encounter. Is there something I'm missing about how the SEHI deduction should be documented? Also, do you know if this QBI reduction is happening in TurboTax too? I can't easily see if TurboTax is also reducing my QBI by the SEHI amount since they don't make it as transparent in their interface.

FreeTaxUSA probably doesn't automatically calculate this because the SEHI deduction for S Corp shareholders involves special rules. Since you're technically an employee of your S Corp, the health insurance premiums need to be either included in your W-2 wages or reimbursed by the S Corp to be deductible as SEHI. The software likely can't determine automatically if your situation meets these requirements. TurboTax is indeed reducing your QBI by the SEHI amount as well, they just don't make it as visible in their interface. Both programs are following the same IRS rules, but TurboTax tends to hide more of the calculations "under the hood" while FreeTaxUSA is more transparent about showing the adjustments and letting you override them if needed.

How does taxr.ai work with documents that already have sensitive info? Do they store your tax docs or just analyze them temporarily? I'm interested but worried about security.

Does it actually work with FreeTaxUSA specifically? I've tried other "tax help" tools before that claimed to work with different software but really just gave generic advice that didn't help with the specific interface issues.

They use bank-level encryption and don't permanently store your documents - they're analyzed and then the data is purged from their systems. I was concerned about security too, but their privacy policy is very transparent about how they handle sensitive information. It absolutely works with FreeTaxUSA specifically. They have interface guides for all major tax software programs, including FreeTaxUSA. What makes it different is they provide screenshots and specific navigation instructions for exactly where to input information in each software platform's interface.

How does Claimyr actually work? The IRS phone lines are notoriously impossible to get through - do they just keep calling repeatedly or something?

Yeah right. I'll believe that when I see it. I've tried calling the IRS dozens of times over the years and have NEVER gotten through to a real person. Sounds like a scam to me - they probably just put you on hold forever like everyone else.

Claimyr uses a system that navigates the IRS phone tree and holds your place in line. When they're about to connect you with an agent, you get a call so you don't have to wait on hold for hours. It works with the IRS's actual phone system, not some separate channel. I was super skeptical too. I've tried calling the IRS at least 15 times over the past two tax seasons and always gave up after being on hold forever. With Claimyr, I went about my day and got a call when they were about to connect me. It saved me literally hours of hold time, and I got a straight answer from an actual IRS agent about my S Corp health insurance deduction question.

Would you still recommend FreeTaxUSA over TurboTax for S-Corp owners despite these issues? I'm considering switching to save money but worried about missing deductions.

I would still recommend FreeTaxUSA, but with some caveats. If you're comfortable understanding tax concepts and willing to double-check calculations for things like SEHI, QBI, and other business deductions, FreeTaxUSA will save you hundreds compared to TurboTax's business tiers. For S-Corp owners specifically, I recommend running your numbers through both systems the first year (like OP did) to catch any discrepancies. After that, you'll know which areas require manual attention in FreeTaxUSA. The savings are significant - I paid $350+ for TurboTax Business before switching to FreeTaxUSA which cost me around $25 for state and federal filing with nearly identical results once I figured out the manual adjustment points.

I used H&R Block last year for my S-Corp and ran into the exact same issue with SEHI deduction and APTC repayment. It seems like TurboTax is the only one that automatically handles this calculation correctly. I ended up having to manually adjust the QBI amount in H&R Block software too.

Thanks for the info. Sounds like most tax software has this issue except TurboTax. I'm still going to try TaxSlayer this year since it's significantly cheaper, but I'll keep careful track of my SEHI deduction and make manual adjustments if needed.

Great question about the APTC repayment calculation! You typically can't just use the full APTC repayment amount as your SEHI deduction - there are some important limitations to consider. The SEHI deduction is capped at the lesser of: (1) the actual premiums you paid, or (2) your net self-employment income. So if your APTC repayment was $1,800, you need to make sure you actually paid at least that much in health insurance premiums during the tax year, and that your S-Corp income supports that deduction amount. Also, the SEHI deduction is calculated on a monthly basis - you can only deduct premiums for months when you weren't eligible for employer-sponsored coverage (including coverage through a spouse's employer). So you might need to prorate the amount based on eligible months. Regarding audits, I haven't been through one personally, but from what I understand, the IRS does pay attention to SEHI deductions, especially when they're large relative to income or when there are APTC complications involved. The key is having good documentation - keep records of your actual premium payments, APTC statements, and calculations showing how you arrived at your deduction amount. As long as you can substantiate the deduction with proper documentation, you should be fine.