A tax credit you can take in advance to lower your monthly health insurance payment (or “premium”). When you apply for coverage in the Health Insurance Marketplace®, you estimate your expected income for the year.
How is the advance premium tax credit calculated?
The amount of the advance premium tax credits that people receive is based on an estimate of the income the household expects for the year. The final amount of the credit is based on their Page 8 8 actual income as reported on the tax return for the year the advance payment was received.
Is premium tax credit refundable?
The premium tax credit – also known as PTC – is a refundable credit that helps eligible individuals and families cover the premiums for their health insurance purchased through the Health Insurance Marketplace.
How are advance payments of the premium tax credit made?
What are advance payments of the Premium Tax Credit? Qualifying taxpayers who enroll in health insurance through a Marketplace can receive advance payments of the premium tax credit. The Marketplace makes advance credit payments directly to the health insurance company to reduce the out-of-pocket cost of the taxpayer’s premiums.
What do you need to know about the premium tax credit?
If you choose to have advance credit payments made on your behalf, you will be required to file Form 8962 with your income tax return to reconcile the amount of advance payments with the premium tax credit that you may claim based on your actual household income and family size.
How do you reconcile advance tax payment with premium tax payment?
They do this reconciliation on Form 8962. If a taxpayer’s advance credit payments are more than his or her premium tax credit, the taxpayer must repay the excess advance credit payments (the amount of the repayment may be limited for taxpayers with household income of less than 400 percent of the federal poverty line for their family size).
Where do I put the advance credit on my tax return?
If the advance credit payments are more than the amount of the premium tax credit you are allowed, called excess advance credit payments, you will add all – or a portion of – the excess advance credit payments to your tax liability by entering it in the ‘Tax and Credits’ section of your tax return.
