What this page sets up
A 55-year-old sole proprietor expecting $70,000 of net profit in 2027 and putting $7,000 into a SEP IRA. The MAGI worksheet is open: $70,000 minus $4,945.34 (half of self-employment tax) minus the $7,000 contribution gives MAGI of $58,054.66, 363% of the poverty line. A $500 benchmark for a 40-year-old scales to $872.46 at 55; 10.22% of MAGI, $494.43 a month, is the expected contribution, leaving a credit of $378.03 a month, $4,536.36 across 2027.
Without the $7,000 contribution, MAGI would be $65,054.66, above the $63,840 cliff for one person, and the credit would be $0. Change the fields to your own figures; the $500 price is an example.
Filling in the worksheet
- Net self-employment profit: receipts minus business expenses, the bottom line of Schedule C (or your share of partnership income). If you also have a job, put the wages in the first field.
- Pre-tax deductions: contributions to a SEP IRA, SIMPLE IRA, a solo 401(k) or a traditional IRA, and HSA contributions you deduct yourself. Roth contributions don’t lower MAGI.
- Tax-exempt interest and untaxed Social Security: both are added back for the credit, even though they aren’t taxed.
The calculator copies the worksheet’s MAGI into the income field, so the credit, the cliff table and the chart follow it.
Why the estimate matters more for the self-employed
The Marketplace pays the credit in advance from your estimate, and your tax return settles it with your actual 2027 income on Form 8962. Profit that comes in above the estimate reduces the credit, and from tax year 2026 any excess advance credit is repaid in full. Near the 400% line, a late invoice or an unexpected contract can decide whether there is any credit at all, which is why the cliff table sits right under the result. Updating your application when a big contract lands keeps the advance payments close to what your return will allow.
Sources for this case: IRS self-employment tax rates, Schedule SE, IRS Publication 974, the 2027 table in Rev. Proc. 2026-26, the 2026 HHS guidelines and the IRS repayment-cap change.