Confused about above the line AGI deductions...

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Topic Author
BuckyBadger
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Joined: Tue Nov 01, 2011 11:28 am

Confused about above the line AGI deductions...

Post by BuckyBadger »

I'd always been under the impression that the premiums I pay for health care are above the line deductions. But I've been having trouble getting my spread sheep hand calc to match my taxes and now that I research it it looks like medical "expenses" above a certain about might be above the line, but that regular monthly premiums are not? I would have bet anything that premiums were above the line...

Could someone possible clarify this for me? I just like to have an idea of how close to what we own we'll be and I missed the mark by about 3k last year and want to improve on that!
earlyout
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Joined: Tue Feb 20, 2007 5:24 pm

Re: Confused about above the line AGI deductions...

Post by earlyout »

When your medical insurance is part of your employee benefit plan, health care premiums are deducted from your pay and not included in your taxable income. An above the line deduction if you want to think of it that way.

Medical insurance premiums you pay out of your pocket are a medical expense and are reported on Schedule A. A "below the line" deduction
fabdog
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Location: Williamsburg VA

Re: Confused about above the line AGI deductions...

Post by fabdog »

Need more info to help... when you say premiums for health care

Are you a W2 employee and these are coming out of your check pre tax? If so there's no deduction

Are you running a small business and taking the health care premiums as part of your schedule C? If so they'll show up as reducing your AGI

Are you deducting medical expenses as itemized deductions? If so, only the amount of medical expenses (including premiums) that are more than 7.5% of your AGI (last year, 10% for 2019) are deductible, and then only to the extent that all your itemized deductions are more than your standard deduction

So if you can be more specific on where/how you are deducting we can offer better advice

Mike
Topic Author
BuckyBadger
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Re: Confused about above the line AGI deductions...

Post by BuckyBadger »

Hmm... I must be messing up somewhere else then. I'm a regular W2 employee and I pay my premiums and on my paystub they appear to be coming off my gross.

I can't figure out why my AGI never matches the one on my 1040...

I thought it was easy:

gross - [ 403b/401k + health care premiums + HSA (for him) + daycare FSA ]

but somehow it never seems to match. Maybe I'm just crazy. That's it, right?

We're not fancy, and since the increased standard deduction we don't even itemize any more. Only one taxable account, so I feel like I should be able to do my taxes in a spreadsheet but it never seems to work out right...

Shouldn't it be this easy?:

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fabdog
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Location: Williamsburg VA

Re: Confused about above the line AGI deductions...

Post by fabdog »

Not sure where the gap is... when you mention off by $3K, was that on AGI or taxes owed?

You mentioned the one taxable account, what did it throw off in Dividends/cap gains/cap gains distributions? They would be in your AGI as well

As you troubleshoot, your spreadsheet can be matched to your W2's to see if that's the issue (maybe issues with pay periods vs the calendar year, etc)

But if your Box 1 wages match what you are projecting, then that's settled

The way I'd troubleshoot this is go theu the tax form line by line vs your spreadsheet to see where the delta emerges...

Your Box 1 W2 amounts vs your forecast is step 1

then what else is getting added as you go down the page (Interest, dividends, cap gains dist, cap gains)

Then you can see what your 1040 has for AGI vs your spreadsheet and that should show where your delta emerges

Mike
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HueyLD
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Re: Confused about above the line AGI deductions...

Post by HueyLD »

You deducted $19k twice, once from yours and again from his gross income.
nolesrule
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Re: Confused about above the line AGI deductions...

Post by nolesrule »

Did you look at your 2018 tax return to see what you are missing?

Your W-2 Box 1 income is gross less all pretax deductions, and that goes on the first line of your tax return.

Additionally your Box 1 may include imputed income from certain employer paid benefits.
lstone19
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Re: Confused about above the line AGI deductions...

Post by lstone19 »

You need to look at the components of AGI (wages/salary, interest, dividends, etc.) before worrying about total AGI. I'd first check to see if your estimate of what your W-2 box 1 (income) matches what the employer is actually reporting. There may be other taxable benefits (such as employer paid life insurance) that add to your idea of what it should be.
Topic Author
BuckyBadger
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Re: Confused about above the line AGI deductions...

Post by BuckyBadger »

HueyLD wrote: Wed Jul 24, 2019 9:50 am You deducted $19k twice, once from yours and again from his gross income.
That is correct, but not clear to an outside observer. He has a 401k and I have a 403b. We max both out.

Will look at the other replies asap! Thanks!!
Carl53
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Re: Confused about above the line AGI deductions...

Post by Carl53 »

A couple of observations:

Medicare and I believe SS w/h is calculated on the top line numbers before any payroll deductions, not what you show as AGI, unless in your case you are over the SS limit. So your Medicare numbers are low.

Your income as a couple is over $250k. I believe there exist Additional Medicare taxes thus due.
https://www.thebalancesmb.com/medicare-tax-3193121
nolesrule
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Re: Confused about above the line AGI deductions...

Post by nolesrule »

Carl53 wrote: Wed Jul 24, 2019 12:29 pm Your income as a couple is over $250k. I believe there exist Additional Medicare taxes thus due.
https://www.thebalancesmb.com/medicare-tax-3193121
Additionally any income from capital gains, dividends and interest would be subject to 3.8% NIIT.
niven
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Re: Confused about above the line AGI deductions...

Post by niven »

nolesrule wrote: Wed Jul 24, 2019 4:19 pm
Carl53 wrote: Wed Jul 24, 2019 12:29 pm Your income as a couple is over $250k. I believe there exist Additional Medicare taxes thus due.
https://www.thebalancesmb.com/medicare-tax-3193121
Additionally any income from capital gains, dividends and interest would be subject to 3.8% NIIT.
To be clearer, the 3.8% NIIT tax is on the smaller of AGI over $250,000 OR cap gains, dividends and interest if AGI over $250,000, not both.
Spirit Rider
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Re: Confused about above the line AGI deductions...

Post by Spirit Rider »

fabdog wrote: Wed Jul 24, 2019 8:46 am Are you running a small business and taking the health care premiums as part of your schedule C? If so they'll show up as reducing your AGI
Mike
The only health care premiums deductible on Schedule C are for the sole proprietorship's W-2 employees. Health care premiums of the sole proprietor can not be deducted on Schedule C. They are deducted on the Schedule 1 (Form 1040), Line 29 Self-employed health insurance deduction.
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