Find Out What You Need to Know About Form 8962

15 Apr Find Out What You Need to Know About Form 8962

Completing Form 8962 can be a complicated process, and taxpayers should avoid several common mistakes. One of the most common mistakes is failing to report all income sources accurately. This can result in an inaccurate calculation of the PTC, leading to either owing money to the government or missing out on additional PTCs. Below, we will explore what Form 8962 is, who needs to file it, and why it is essential to understand the process of calculating and reconciling premium tax credits.

• If you didn’t, you might have been receiving too much or too little in APTC.
• 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.
• 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.
• 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.
• SmartAsset Advisors, LLC (“SmartAsset”), a wholly owned subsidiary of Financial Insight Technology, is registered with the U.S.
• For the purposes of qualifying for the Premium Tax Credit, it is your modified adjusted gross income (or MAGI) plus the adjusted gross income or AGI of every other individual in your family who is required to file a tax return.
• Most individuals who obtain their health insurance through a Marketplace will receive an advance of their premium tax credit.

But since the Premium Tax Credit is meant to help families afford health insurance, you may want to save the money and fill out the form yourself. While they seem complicated, IRS instructions are actually quite clear. However, if you’re eligible for more money in PTC than was paid in APTC, you could get the difference back in your tax refund. Even if your income makes you eligible, you must meet the other qualification criteria as well.

Step 3: Complete Form 8962

For more information on when any excess premium tax credit is limited, see the Form 8962 instructions on page 15 (Line 28 instructions). Unfortunately, you will not qualify for the credit if you are also eligible for coverage through your state’s Medicaid program that is above the federal poverty levels. If you are a taxpayer who received an IRS notice reporting that the Form 8962 is missing, you can disregard this if you are part of those who had excess APTC for 2020.

• If you are covered by a health insurance plan that you purchased on your own, then you may have received advance premium tax credit (APTC) to help cover the cost of your premiums.
• You must file an income tax return for this purpose even if you are otherwise not required to file a return.
• Or, if you got divorced in the tax year and are now filing separately but at one point during the year you both were covered by the same health care policy, this section is also for you.
• Another common mistake is failing to report changes in family size or other factors that may affect eligibility for the PTC.
• This advance tax credit is based on your estimated household income you provided when you signed up for marketplace insurance.
• The premium tax credit took effect beginning in the 2014 tax year, and provides tax savings to offset the cost of health insurance, for those who qualify.

An allocation percent can be entered in one column and another column can be blank if no allocation applies. Review the Form 8962 instructions for details on situations that require allocation. If you received such a letter, you may use the tool below to help generate this form for you.

What Is Form 8962?

Form 8962 is a crucial IRS form that taxpayers must understand during tax season, especially those who purchased it. Did you know that by May 28, 2021, the IRS received more than 7 million tax filings, including Form 8962? When compared to the same time period in 2020, this is an increase of about 45%. If the percentage on Form 8962, line 5 is 400% or higher, the entire amount of any amount of excess premium tax credit is due.

This calculation matters because it determines whether or not you owe money to the IRS. If the amount of advanced premium tax credit received is less than the amount of the premium tax credit you’re eligible to receive, then you’re owed the difference. On the other hand, if https://turbo-tax.org/premium-tax-credit-form-8962/ the amount of advanced premium tax credit received exceeds the amount of the premium tax credit you’re eligible to claim, you owe money back to the IRS. The sum you owe could either reduce the size of your overall tax refund or mean that you have to pay money to the IRS.

Instructions for form 8962 : premium tax credit (PTC).

This form helps calculate and reconcile premium tax credits received throughout the year. In this article, we will discuss everything you need to know about Form 8962, including the process of calculating and reconciling premium tax credits, common mistakes to avoid, and more. For 2022 – 2025, taxpayers who purchased their health insurance through an Exchange (Marketplace) 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. This will result in an increase in the credit for most eligible individuals.

The IRS provides instructions on how to fill out Form 8962 on its website. All features, services, support, prices, offers, terms and conditions are subject https://turbo-tax.org/ to change without notice. If you don’t get one in the mail, you should be able to view your form by logging into your Marketplace account online.

More In Forms and Instructions

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 order to do this, you will need to add the information from your Form 1095-A into your eFile.com account. After you complete your return, we will generate eFileIT Form 8962 for you based on the information you have entered from your Form 1095-A. The 8962 form will be e-filed along with your completed tax return to the IRS. Before you dive into Part I, write your name and Social Security number at the top of the form.