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The advance payments of the PTC are estimates, meaning they may not be exactly what you are owed which is why a tax return is needed to reconcile the amounts. If your income, family size, filing status, or other circumstance sees a change during the year, you can notify the Marketplace about this change so your advance payments are adjusted. Otherwise, the difference will be calculated when you file your return the following the year. Form 8962,Premium Tax Credit, reconciles 2019 advance payments of the premium tax credit and may also affect a taxpayer’s ability to get advance payments of the premium tax credit or cost-sharing reductions.
How do I reconcile my advanced premium tax credit?
To reconcile the premium tax credit you received, fill out IRS Form 8962. This form will help you calculate the premium tax credit you should have received based on your income, and the amount you actually received based on the information you provided when you filled out an application for a Health Insurance Marketplace plan.
The amount of the credit is based on the taxpayer’s income and the healthcare plan they enroll in through the Marketplace. When you enroll, claim the amount of the credit based on what you expect your income to be for the year you are selecting coverage for. When you prepare your return on eFile.com, report your 1095-A and the eFile Tax App will calculate whether you had an excess PTC during the year or if you are owed an additional refund. When you buy health insurance from the Marketplace, you need to provide information about your family size and income to determine your premium tax credit eligibility. During the year, you may experience changes in income that differ from what you expected when filling out the Marketplace application.
Understanding Form 1099-K
You only need to complete IRS Form 8962 if you purchased health insurance through the Affordable Care Act’s Health Insurance Marketplace. If you’re covered by a health insurance plan at work or you purchased health insurance directly from an insurance company outside of the exchange, you don’t need this form to complete your tax filing. The resources on this page provide information about your Form 1095-A from NY State of Health. The Form 1095-A is used to reconcile Advance Premium Tax Credits and to claim Premium Tax Credits on your federal tax returns.
It does not provide for reimbursement of any taxes, penalties, or interest imposed by taxing authorities and does not include legal representation. Additional terms and restrictions apply; See Guarantees for complete details. Part III is used to calculate any excess advanced premium tax credit payments, based on the information you provided in Part II. Part II is where you reconcile your advanced premium tax credit received with monthly premium amounts. However, for Premium Tax Credit, Form 8962 the tax year 2020, the IRS has decreed you are not required to file Form 8962 if it turns out you have excess advance premium tax credits. For 2022 – 2025, taxpayers who purchased their health insurance through an Exchange may see an increase in their premium tax credit. Under the American Rescue Plan Act, the amount that an individual must contribute towards paying for their health insurance based on the benchmark silver plan is reduced at every income level.
What Is Form 8962: Premium Tax Credit Used for?
Enter an amount for the taxpayer if the taxpayer had coverage through the Marketplace before marriage. Enter an amount for the spouse if the spouse had coverage through the Marketplace before marriage. Enter an amount for both taxpayer and spouse if they both had coverage through the Marketplace. Review the Form 8962 instructions and IRS Publication 974 to determine if this is the desired treatment.
Your accountant and most online tax filing services like TurboTax will walk you through this. In general, it is very important to file your federal tax return with Form 8962 for any year you received an advanced premium tax credit. If you don’t file Form 8962, the IRS will call this a failure https://turbo-tax.org/ to reconcile, and you could be prevented from applying for Marketplace premium tax credits in the future. In the following year, the Health Connector sends out federal tax form 1095-A which shows the amount of APTC paid on behalf of the members of the tax household for the prior year.
Form 8962 – Premium Tax Credit (PTC)
Form 1095-A contains information needed to generate Form 8962. If you did not receive it, you may download a copy from the Marketplace. The offers that appear in this table are from partnerships from which Investopedia receives compensation.
Do I have to pay back my premium tax credit?
Only if you received more money than you should have. IRS Form 8962 gives you instructions on how to calculate what you should have received based on your income. If that number is higher than what you actually received, you’ll need to pay back some of your credit. However, the IRS caps what you owe if your adjusted gross income was less than 400% of the federal poverty level.