January 21, 2016
Individuals Will Use IRS Forms 1095-A and 8962
The Affordable Care Act's premium tax credit is designed to help eligible individuals and families with low or moderate income afford health insurance through the Health Insurance Marketplace. The credit is either paid upfront to insurers as advance payments to lower monthly premiums, or is received when taxes are filed. The IRS is reminding eligible individuals that they may claim the premium tax credit on their 2015 income tax returns. Individuals that enrolled in Marketplace coverage should also be receiving Form 1095-A, Health Insurance Marketplace Statement, from the Marketplace by early February.
Receipt of Form 1095-A
Individuals will use the information from Form 1095-A to file their taxes accurately. This information includes the name of the individual’s insurance company, dates of coverage, the amount of monthly insurance premiums for the plan the individual and other members of his or her family enrolled in, the amount of any advance payments of the premium tax credit for the year, and other information needed to compute the premium tax credit.
Reconciling Advance Payments on Form 8962
Eligible individuals that received advance credit payments must file a federal tax return and reconcile the advance credit payments with the actual premium tax credit they are eligible to claim on their returns. Failing to file a tax return to reconcile advance payments will prevent eligible individuals from receiving advance credit payments in future years.
Individuals will use IRS Form 8962, Premium Tax Credit (PTC), to make this comparison and to claim the credit. If the advance credit payments are in excess of the amount of the premium tax credit an individual is eligible for, based on his or her actual income, the individual must repay some or all of the excess when filing his or her return, subject to certain caps.
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Individuals may use the IRS interactive tool, Am I Eligible to Claim the Premium Tax Credit?, to determine their eligibility.