Premium Tax Credit and Do You Qualify? Find Out Here Now

Premium Tax Credit, Form 8962

Electing to take less than the maximum available APTC will increase the amount of the member’s monthly premium contribution. An individual making this choice will be able to collect the full premium tax credit amount when he or she files a federal tax return. However, if you do not want to have any of your credit paid in advance, you can claim the entire credit on your tax return, which will either increase your refund or lower the amount of taxes you owe. If you purchase health insurance and receive a 1095-A at the end of the year, you will need to report this on your income tax return. Advance premium credits are paid directly to your health insurance plan provider, reducing your monthly premium payments. You can claim payments in advance towards your monthly health insurance premium when you apply for health insurance through the Marketplace.

Premium Tax Credit, Form 8962

The Marketplace may periodically check state Medicaid data to identify consumers who may be dual-enrolled, and direct them to return to the Marketplace to discontinue their APTC. Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in oureditorial policy.


This is where you’ll figure out your PTC and compare it against any advance payments . If you had marketplace coverage for the whole year you’ll use Line 11 to enter your annual totals. Otherwise, use one or more of the lines for the 12 months of the year to enter your monthly contributions. Part III is used to calculate any excess advanced premium tax credit payments, based on the information you provided in Part II. The Health Coverage Tax Credit and the Premium Tax Credit cannot be claimed for the same coverage for the same month. Enter X if all premiums entered on the 1095A and PTC screens, Shared Policy Allocation, are included in the HCTC Qualified health insurance payments in the 8885 screen.

If advance premium tax credits are entered on the 1095A screen, UltraTax CS calculates Form 8692 even if the household income is below 100 percent. Since there are no premiums in a well-designed single payer system, there would be no need for premium tax credits. The entire health care system would be funded by simplified taxes based on ability to pay. The health care system would always be there for you whenever you needed it, regardless of your tax situation. Even if delinquent, the IRS could not penalize or take away your health benefits. Many of the people potentially affected have incomes so low that they would not otherwise have to file tax returns.

Premium Tax Credit Amount

The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. The range is 100% to 400% of the federal poverty line amount for the size of your family for the current tax year. Part V is only for couples who got married in the tax year for which they’re filling out Form 8962. If this is you, consult the directions to figure out whether you need to fill out this section. The chart in the form instructions will help you determine whether you are eligible for the alternative calculation. If the amount on line 24 is greater than that on line 25, subtract line 25’s amount from line 24. Enter the difference on line 26 and on your 1040 or 1040NR form.

Premium Tax Credit, Form 8962

You must use Form 8962 to reconcile your estimated and actual income for the year. Even if you estimated your income perfectly, you must complete form 8962 and submit it with your federal tax return. The eligibility notice will identify the maximum amount of the premium tax credit on a monthly basis and the individual can choose whether to take the full amount or a smaller amount in advance. The Health Connector then notifies the IRS how much APTC should be sent directly to the insurance company on the member’s behalf.

Who Can File IRS Form 8962: Premium Tax Credit?

The APTC is based on the Marketplace’s estimate of the PTC the taxpayer will be able to claim for the year. The taxpayer chooses how much, if any, of this amount to apply toward the insurance premiums. If you need more time to do your taxes, you can file for an extension using Form 4868. That said, filing Form 4868 will only extend when your tax return is due. So you should estimate how much you owe and pay it when you file Form 4868. If you were enrolled in a 2021 Marketplace plan but didn’t file and “reconcile” your 2020 taxes, you’ll get a notice saying you may lose the financial help you’re getting for your 2022 plan. If you qualify for CSRs, you also have a lower out-of-pocket maximum.

  • Enter an amount for both taxpayer and spouse if they both had coverage through the Marketplace.
  • Therefore, the Internal Revenue Service created forms for taxpayers to use when filing their federal income taxes.
  • These amounts are the family size of the taxpayer and spouse before marriage.
  • The taxpayer chooses how much, if any, of this amount to apply toward the insurance premiums.
  • Emerging tech like robotic process automation can help internal auditors and financial services firms increase efficiency.
  • The premium tax credit is a tax credit that offsets your annual health insurance premiums.
  • However, if the credit is more than your advance credit payments, the difference will be subtracted from your taxes due or added to your refund.

You must file an income tax return for this purpose even if you are otherwise not required to file a return. In contrast, if you chose not to have this credit applied to your health insurance, you will have to file Form 8962 in order to claim this credit on your tax return. IRS Form 8962 will be used to calculate the consumer’s eligibility for, and the amount of, Premium Tax Credit or “financial assistance” they are eligible to receive to help make their health insurance coverage more affordable.

How the premium tax credit works

On Line 26, you’ll find out if you used more or less premium tax credit than you qualify for based on your final 2021 income. While we have made every effort to provide accurate information in these FAQs, people should contact the health insurance Marketplace or Medicaid agency in their state for guidance on their specific circumstances. This is a discount that lowers the amount you pay for out-of-pocket costs such as deductibles, co-pays, and co-insurance. It means you pay less out-of-pocket each time you get medical care, including at the doctor’s office, hospital, or urgent care.

Premium Tax Credit, Form 8962

Remember, with TurboTax, we’ll ask you simple questions about your life and help you fill out all the right tax forms. With TurboTax you can be confident your taxes are done right, from simple to complex tax returns, no matter what your situation. As a result, you might face different circumstances at the end of the year, meaning you might have credit left over or you might need to repay some of your credit.

Or, click the blue Download/Share button to either download or share the PDF via DocuX. State and local governments can use StateRAMP to find cloud service providers that meet cybersecurity standards. Our solutions for regulated financial departments and institutions help customers meet their obligations to external Premium Tax Credit, Form 8962 regulators. We specialize in unifying and optimizing processes to deliver a real-time and accurate view of your financial position. The allowable PTC is the lesser of the maximum premium assistance and the actual premium amount from Form 1095-A. The PTC calculation can be followed on Form 8962, Premium Tax Credit .

  • The APTC pays all or a portion of the taxpayer’s estimated PTC directly to the insurer.
  • If your household income is not within 400% of the federal poverty line, your credit repayment is not protected and you would need to pay this back if you took advance payments you were not eligible for.
  • In this case, you may have to pay some or all of the premium assistance when you file your taxes.
  • If you enrolled for health insurance through the Marketplace and received a Form 1095-A, you will use it to complete Form 8962.
  • For the latest updates on coronavirus tax relief related to this page, check

If you want professional help preparing your returns, consider hiring a financial advisor who also provides tax prep or who works with a tax accountant. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now. Get Covered New Jersey offers financial help to qualifying residents to help lower their monthly premiums and out-of-pocket expenses. Due to the American Rescue Plan Act, Get Covered New Jersey customers are now eligible for expanded financial help for all income levels. UltraTax CS defaults to using the repayment limitation based on the household income in the return.


Review the Form 8962 instructions and IRS Publication 974 to determine if this is the desired treatment. UltraTax CS automatically calculates the percentage of Premium Tax Credit that is allocable to self-employed health insurance premiums based on the ratio of specified premiums to total premiums paid. Use this field to force a difference allocation percent to calculate the PTC Simplified Calculation Worksheet line 13.

However, if the Connector cannot verify the tax filing by a later data match with IRS, the individual may again lose ConnectorCare/APTC. If the household income on your tax return is lower than the income you put on your Covered California application, you may not have received enough premium assistance. At tax time, you may get the extra premium assistance in the form of a tax credit to lower the taxes you owe.

The net marketplace premiums are reported on Schedule A, Itemized Deductions, line 1, Medical and dental expenses. The Schedule A, Line 1 – Medical and Dental Expenses not required statement will identify the computed amount with the description Net marketplace premiums. Use this field to force a different amount from the calculated value. If you received such a letter, you may use the tool below to help generate this form for you.

UltraTax CS enters “0” on Form 8962, line 1, as indicated in the Form 8885 instructions. The Department of Health and Human Services plans to provide a tool that lets you look up the second lowest cost silver plan premium. The I.R.S. also said 760,000 taxpayers had received subsidies and filed returns but had not attached the required form comparing the subsidies paid with the amount they were entitled to receive.

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