FORM 8962: RECONCILING THE PREMIUM TAX CREDIT - MAR 2020
Money
Contributed by : Mukesh Makker
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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. Taxpayers who don't file and reconcile their 2019 advance credit payments may not be eligible for advance payments of the premium tax credit in the future. Furthermore, filing Form 8962, with a return avoids possible delays in processing tax returns and subsequent delays in receiving tax refunds.
Background
The premium tax credit helps pay for health insurance coverage bought from the Health Insurance Marketplace. When the taxpayer or their family member applies for coverage, the marketplace estimates the amount of the premium tax credit they may be able to claim. This estimate is based on information the taxpayer provides about family size and projected household income. The taxpayer can then decide if they want to have all, some, or none of the credit paid directly to their insurance company. This option will lower their monthly payments.
Who needs to file Form 8962?
Taxpayers who have advance credit payments made on their behalf are required to file Form 8962 with their income tax return. This will reconcile the amount of advance payments with the premium tax credit they may claim based on their actual household income and family size.
Reconciling advance credit payments
Taxpayers or members of their family who enrolled in health insurance coverage for 2019 through the marketplace should receive Form 1095-A, Health Insurance Marketplace Statement. This form shows the months of coverage and amount of any Advanced Premium Tax Credit (APTC) paid to the taxpayer's insurance company. This form also provides information needed to complete Form 8962.
Taxpayers should figure their premium tax credit and compare it to the amount of APTC on Form 8962, then file Form 8962 with their tax return.
Taxpayers who received advance credit payments must file a tax return to reconcile even if they otherwise don't have to file.
Please call the office if you have any questions about this or any other topic affecting your tax return.
| About Author |
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Mr. Maker is a certified Public Accountant and serving the South Asian community since 1993.
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Website: https://www.taxmaker.com/newsletter.php#8
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