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Like she said, don't always apply logic to taxes.

However, in this case logic works, just not as you expected.

Think of the advance payment of premium tax credit as a loan. You spent 16,734 for health insurance, of which 13,653 was paid with a loan from the government.

Expenses paid for with borrowed money are deducted when the expense was paid - when the money was borrowed. They are not deducted when the borrowed money is repaid. The same thing happens when you pay deductible expenses using a credit card. They are deducted when you present your card and pay the expense with borrowed money. They are not deducted when you pay the credit card issuer.

So the full 16,734 is deducted in 2017 when it was paid. The ultimate repayment of the loan in 2018 becomes irrelevant to your taxes.

--Peter
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