If neither John nor Carol notifies the Marketplace about the change in family circumstances, the Form 1095-A that Carol or John receives will report in column B the applicable SLCSP premium that covers Carol, Mark, and John, which will be incorrect. Carol looks up the SLCSP premium that applies to her and Mark. Enter “0.50” in columns (e) and (g) of the appropriate line in Part IV to allocate the enrollment premium and APTC. Leave column (f) blank because you do not allocate the applicable SLCSP premium. Instead, enter the SLCSP premium that applies to your coverage family on lines 12 through 23.
Lydia’s Worksheet D. Taxpayer Allocating With Divorced or Legally Separated Taxpayers
After completing Part IV, David multiplies the amounts from Form 1095-A, Part III, by the corresponding percentages in Part IV, and enters these allocated amounts on Form 8962, lines 12 through 20, columns (a), (b), and (f). On each of those lines, he will enter $245 in column (a) (enrollment premiums of $700 x 0.35), $228 in column (b) (applicable SLCSP premium of $650 x 0.35), and $149 in column (f) (APTC of $425 x 0.35). David leaves Form 8962, lines 21 through 23, blank because he was not enrolled in a qualified health plan during October through December. If Situation 2 applies, use these rules to determine the enrollment premiums and the applicable SLCSP premium for the months any not lawfully present family members are enrolled.
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The Form 1095-A furnished by the Marketplace to Gary shows an enrollment premium of $15,000 for the year and the SLCSP premium that applies to a coverage family that incorrectly includes Gary, Gary’s daughters, and Jim. (Some states may report -0- or leave column B blank on the Form 1095-A when no APTC is paid.) Gary and Jim determine that the SLCSP premium that applies to Gary and his two dependents is $12,000 and the SLCSP premium that applies to Jim is $6,000. Gary and Jim are applicable taxpayers and each can take the PTC.
It’s crucial to adjust your credit accordingly to avoid discrepancies during tax filing. Using a Premium Tax Credit calculator can simplify the process of estimating your eligible credit. These tools consider your income, household size, and the cost of available health plans to provide an premium tax credit, form 8962 estimate of your potential credit. Claiming the Premium Tax Credit involves calculating your eligible credit and ensuring it aligns with any advance payments you’ve received.
If you checked “No” on line 10 and you are completing lines 12 through 23, do not complete line 11. Subtract the amount in column (c) from the amount in column (b). Full-year coverage with no changes on Form 1095-A, Part III, column A or B. Read the following instructions to determine whether you should check “Yes” or “No” and then proceed as directed. For the latest information about developments related to Form 8962 and its instructions, such as legislation enacted after they were published, go to IRS.gov/Form8962. To complete Form 8962, you’ll need Form 1095-A, which details your Marketplace coverage.
Worksheet for Line 4 of Worksheet III
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. If you use more of your premium tax credit than your final taxable income allows, you’ll need to repay the difference when filing your Form 1040 at tax time.
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He leaves columns (e) and (f) blank because he is not an applicable taxpayer. This is the allocation percentage based on the rules under Allocation Situation 4. Other situations where a policy is shared between two tax families in the Form 8962 instructions. A reference month for enrollment premiums is a month in which the not lawfully present family member is not enrolled in coverage and there are no other changes in the members of your family who are enrolled in the coverage.
- By the end of Part I, you’ll have your annual and monthly contribution amounts (lines 8a and 8b).
- Because Carol and John are not filing a joint return, they each have their own tax families, which are different from the tax family they indicated to the Marketplace they expected to have when they enrolled.
- You should disregard letters from the IRS asking for a missing Form 8962 if you have excess APTC for tax year 2020.
- If Line 24 is greater than Line 25, then subtract Line 25 from Line 24.
- In Part IV, you can complete allocation of policy amounts for up to 4 policy amount allocations.
- The vast majority of individuals who need to repay excess advance payments will satisfy that balance through a reduction in their expected income tax refund.
The Taxpayer Bill of Rights describes ten basic rights that all taxpayers have when dealing with the IRS. Go to /Taxpayer-Rights for more information about the rights, what they mean to you, and how they apply to specific situations you may encounter with the IRS. TAS strives to protect taxpayer rights and ensure the IRS is administering the tax law in a fair and equitable way.
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Receiving a notice from the IRS about Form 8962 can be confusing, especially if you’re unsure why it’s needed. This form reconciles the Premium Tax Credit (PTC), which helps lower health insurance costs for those who purchase coverage through the Health Insurance Marketplace. If the IRS is requesting it, there’s likely an issue that must be resolved before your tax return can be processed correctly. This total is then compared to the total APTC you received during the year, which is the sum of Column C from your 1095-A and is entered on Line 25.
IRS Form 4684 Instructions
- Discrepancies often arise due to changes in income, family size, or employment status during the year.
- If you are instructed to complete line 11, do not complete lines 12 through 23.
- If Exception 2 applies, you are treated as married but can take the PTC with the filing status of married filing separately.
- Use this section to allocate policy amounts from a qualified health plan if you meet either of the following conditions and no other allocations for the policy are necessary.
- This result is the amount of your PTC that is more than the APTC paid, your net PTC.
Include on line 1 the amount from Schedule B (Form 1040), line 2. If you are filing Form 8814, and the amount on Form 8814, line 4, is more than $1,300, you must also include the following amounts on line 1. After you complete Form 7206, follow the instructions below.
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If your household income changes, your APTC might need to be adjusted. Always report changes to the Marketplace ASAP to avoid an unexpected repayment during tax filing. This effort to issue refunds to those who paid an excess APTC repayment amount on their 2020 return is ongoing and will continue. If there is only one silver plan, that plan is treated as the second lowest cost silver plan. If the two lowest cost silver plans have identical premiums, that premium is the premium for the second lowest cost silver plan. If you also receive Form 1095-B or 1095-C, which are unrelated to the Marketplace, see our questions and answers for information about how these forms affect your tax return.
In December, Don received an unexpected $6,500 bonus, which increased his 2024 household income to $43,500. Form 8962, Premium Tax Credit (PTC), is used to reconcile two figures for taxpayers with Health Insurance Marketplace coverage. The form compares the amount of advance premium tax credit (APTC) you received during the year with the actual premium tax credit you qualify for based on your final annual income. The APTC is the subsidy paid directly to your insurance company to lower your monthly premiums, while the PTC is the credit you are ultimately eligible to receive. The outcome of this reconciliation determines if you have an additional credit on your tax return or must repay some of the assistance you received.