Taxpayers describe that document, I.R.S. Form 8962, as daunting. Here is a high-level overview and https://turbo-tax.org/ 3 interactive simple steps to take to find out if you might qualify for the Premium Tax Credit.
Someone in the tax family enrolled in a qualified plan through the Marketplace. For a married filing separately return that meets these conditions, enter X in this field.
Where to Mail Form 8962
It’s a way for the Marketplace to report information about your health insurance plan and any premium tax credits you receive to the IRS for tax purposes. If you use advance payment of the premium tax credit to lower your monthly premium payment, you will have to “reconcile” when you file your federal income taxes the following year using IRS Form 8962. Individuals filing their federal income taxes must be able to prove they were enrolled in qualifying health care coverage. Therefore, the Internal Revenue Service created forms for taxpayers to use when filing their federal income taxes. Form 8962, the Premium Tax Credit must be filed with a 1040 income tax return by individuals who already received advance subsidies through a healthcare exchange.
For example, consumers changed from Silver to Gold or Silver Enhanced 73 to Silver Enhanced Silver 94, but did not change their health insurance carrier. However, it appears that the IRS will reject an e-filed return that’s missing a Form 8962 only if APTC payments were used by or on behalf of the taxpayer. You or a member of your household received any premium tax credit in advance. Even if your income makes you eligible, you must meet the other qualification criteria as well. You’ll use Form 8962 to determine your full eligibility to claim the premium tax credit.
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If the household income on your tax return is higher than the household income you put on your Covered California application, then you may have had too much premium assistance paid in advance on your behalf. In this case, you may have to pay some or all of the premium assistance when you file your taxes. The IRS requires you to file a tax return so you can continue qualifying for advance tax payments on your health insurance from the Marketplace.
- In addition, Covered California is required to mail an IRS Form 1095-A to its enrollees at the beginning of each year that details the amount of the Advanced Premium Tax Credit received, if applicable.
- If your income goes up or you lose a tax household member, you will probably qualify for less premium tax credit.
- For the purposes of qualifying for the Premium Tax Credit, it is your Modified Adjusted Gross Income plus the Adjusted Gross Income or AGI of every other individual in your family who is required to file a tax return.
- The IRS requires you to file a tax return so you can continue qualifying for advance tax payments on your health insurance from the Marketplace.
- Since there are no premiums in a well-designed single payer system, there would be no need for premium tax credits.
Changes in income or household size may lower or raise your premium tax credit. Your advanced premium tax credit amount is based on the income you think you are going to make in the coming year. When you file your taxes, you will need to report the amount of premium tax credit you used. If your income or household size changes during the year, you may owe back part of the premium tax credit. An individual who is flagged for “failure to reconcile” will not be eligible for ConnectorCare until he or she files a return along with Form 8982 for the relevant year. Once the individual files the required tax forms, the individual may then attest to the Health Connector that he or she has filed, and the individual may once more be eligible for ConnectorCare.
What Is Form 8962: Premium Tax Credit Used for?
This page specifically covers Form 8962which is used for the Premium Tax Credit . The premium tax credit is a tax credit that offsets your annual health insurance premiums. It’s a way for the government to pay for some or all of your private health insurance costs. Form 8962 is also used to reconcile the premium tax credit you might be eligible for with any advanced premium tax credit payments you’ve already received. If your APTC is greater than your PTC, you’ll need to enter this information in Part III. On line 27, subtract line 24 from line 25 if line 25 is greater.
Clients who had a Marketplace health plan in 2020 will receive their 1095-A Health Insurance Marketplace Statement in the mail by mid-February.*
Clients need to use their 1095-A to file Form 8962 with their tax return. If they don’t, they could lose their premium tax credit.
— Pete Araiza (@psaraiza) February 10, 2021
If Form 1095-A was lost, never received, or is incorrect, you should contact your Marketplace directly for a copy. For purposes of the premium tax credit, your “family” consists of yourself, your spouse if filing jointly, and all other individuals whom you claim as dependents.
Calculation of the PTC
You and the other tax family will have to decide how you will split the burden of reconciling any APTC repayments if applicable. Form 8962 is used to reconcile the difference between the amount of advanced premium tax credit you received and the amount of premium tax credit you’re eligible to receive—and determines whether or not you owe money to the IRS. Consumer households that contained individuals that were enrolled in more than one health insurance plan during the calendar year will receive multiple 1095-A forms . For example, if you changed plans during 2014, you will receive two 1095-A forms and use the information on both to complete one IRS Form 8962. Under federal rules, anyone who receives an insurance subsidy must file a tax return to verify that the person was eligible and received the proper amount of financial assistance based on household income.
I do qualify for your Free File. But, when I enter my health insurance information as Form 8962 it says its a Premium Tax Credit and need to upgrade to file and thus pay. Not Free.
— David Garcia Ozua (@garciaozua) January 19, 2021
If you elect not to receive it upfront, you’ll receive whatever amount you qualify for in the form of a refund when you file your tax return the following year. If your estimated income falls between 100% and 400% of the federal poverty level for a household of your size, you can claim the premium tax credit. You may use some or all of this credit in advance to lower your monthly premium costs, leaving money in your pocket.
Health Insurance and the Premium Tax Credit
If you think your income might go up or your tax household size may go down, you can lower the tax credit amount you take in advance each month. You can do this Premium Tax Credit, Form 8962 at the end of the GetCoveredNJ enrollment process. This will help make sure you do not owe back any of the tax credits you took in advance for health premiums.
- Lines 1 and 9 include notes that help you determine whether Part IV is necessary for you.
- If your income or tax household size during the year is not what you put on your application, it is important to update your application on GetCoveredNJ right away.
- The new CCH Axcess Tax Return Dashboard is now available to all CCH Axcess Tax users, providing a convenient new way to work with 1040 returns, in time for extension season.
- The marketplace determined your eligibility for a subsidy, which is also your advance payment or APTC, based on what you entered as your income and personal exemptions.
The tax filer may be due a larger credit than the amount he or she received in advance or the tax filer may have received a larger credit in advance then he or she was due. In the latter case, the individual will have an added tax liability. For those consumer households that did not receive APTC, the IRS Form 8962 will help them see if they should have received tax credits, based on their information when they file their federal income tax return. If they are eligible for tax credits based on the information in IRS Form 8962, they may be eligible to receive the amount of tax credits they should have received throughout the year in the form of a tax refund . You need to complete Form 8962 if you wish to claim a premium tax credit on your tax return, or you received advance payments of premium tax credits during the year.
It can be paid in advance directly to a healthcare insurance company to offset the cost of monthly health insurance premiums. The IRS will reject electronically filed tax returns for 2021 that are missing a required Form 8962, Premium Tax Credit . Form 8962 reconciles advance premium tax credit payments with the health insurance premium credit claimed on the taxpayer’s return. Internal Revenue Service Form 8962 is the tax form you use to calculate your actual premium tax credit and reconcile it with any advance payments you received during the year. Your accountant and most online tax filing services like TurboTax will walk you through this. 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. The tax filer needs this form to complete IRS Form 8962 Premium Tax Credit.
At year-end, when you file your tax return, you will know what your actual income was for that year. If you underestimated your income at Open Enrollment, you might have received too much premium tax credit during the year, in which case you might have to repay some or all of the excess amount. If you overestimated your income at Open Enrollment, you might be owed additional tax credit, which you can take as a tax refund when you file.
You may receive more than one Form 1095-A for the year if you changed Marketplace health insurance plans, added or removed family members from your coverage, or have more than five family members enrolled on the same plan. If you haven’t filed your 2020 tax return — or filed a return but didn’t “reconcile” the premium tax credit for all household members — you must do so immediately. UltraTax CS automatically calculates most conditions for qualifying for the Premium Tax Credit. If the taxpayer does not qualify for a reason not determined in the tax return , mark this box to indicate the entire advance payment must be repaid. Taxpayers whose household income is below 100 percent of the federal poverty level are not eligible for the Premium Tax Credit unless they meet all of the following conditions.