Form 8962 Instructions | Claim the Premium Tax Credit
Have you signed up for health insurance through the Marketplace? If so, you may be eligible for premium tax credits that lower your monthly payments. But to claim these valuable credits, you must file form 8962 when you file your tax return.
This critical tax form reconciles the premium tax credit payments you receive during the year with the final amount you’re eligible for based on your modified adjusted gross income. Please complete it correctly to avoid losing out on credits that could potentially increase your refund or reduce your tax liability.
In this comprehensive guide, we’ll explain everything you need to know about Form 8962, from how premium tax credits work to step-by-step instructions for filling it out accurately.
What is IRS form 8962 - Premium tax credit?
Form 8962 is the official IRS form used to reconcile your advance premium tax credits with the amount you qualify for.
The advance premium tax credit helps make the health insurance marketplace affordable by lowering your health insurance premiums. When you apply, your estimated credit is calculated based on predicted income and family size for the tax year.
You can choose to:
- Get the advance payment of premium tax credit to reduce monthly payments
- Claim the entire credit during tax filing
The form ensures you get the proper credit amount based on your final figures for the year. Failing to file it can mean that the IRS won’t process your tax return, potentially losing hundreds or thousands in credits!
Now, let’s look at how the credit works in more detail.
How does the premium tax credit work?
The premium tax credit is available to help make health insurance affordable for those who buy plans on the health insurance marketplace. Here are some key facts:
- Eligibility is based on your projected household income and size.
- You can choose advance payments to lower your monthly premium amounts.
- These advances are just estimates.
- It reconciles your exact credit based on final income data.
- If your final amount is higher, you get money back or a reduced tax liability.
- If you received excess advance premium tax credit, you may owe repayment, subject to limits.
When do you need to file form 8962?
If you received advance premium tax credits (APTC) or any premium tax credits (PTC) to help pay for a Marketplace health insurance plan, this form is a crucial tax form you must file. Use form 8962 to reconcile the amount of premium tax credits you received with the actual amount you qualify for based on your final household income and family details for the year.
Filing it with your annual federal income tax return calculates the premium tax credit you can claim. You don’t need the form if you:
- Bought insurance outside the Marketplace
- Had employer coverage all year
- Had Medicare or Medicaid only
How do I fill out form 8962 Step-by-Step?
The IRS Form 8962 instructions provide a step-by-step guide to complete the form to claim and calculate the credit. Following the IRS 8962 instructions carefully will help ensure you fill out the form accurately to determine the correct amount of premium tax credit you can claim. Follow these steps to complete IRS form 8962:
- Step 1: Gather documents
You'll need:
- Form 1095-A from the Marketplace
- Total household income
- Family size
- Monthly insurance premiums
- Step 2: Calculate allowable credit
Use Part 2 to calculate the premium tax credit you qualify for based on your final income, family size, and premium amounts.
- Step 3: Compare with advance payments
In Part 2, reconcile the premium tax credit to total advance payments issued during the year shown on Form 1095-A.
- Step 4: Determine if you owe
If advance payments exceed your allowable amount, Part 3 calculates whether you owe repayment to the IRS, subject to repayment caps.
- Step 5: File with your tax return
Complete Form 8962 and attach it to your Form 1040 tax return.
Following these steps accurately ensures you get every dollar of premium tax credit you deserve!
When is the tax form 8962 deadline?
Form 8962 must be filed along with your annual federal income tax return. The deadline is typically April 15, though extensions may be granted until October 15. Contact the Marketplace if you are still waiting to receive a Form 1095-A.
Can I get more premium tax credit with Form 8962?
Yes! If your household income or size changed during 2022 in ways that qualify you for more credit, filing Form 8962 allows you to get the additional premium tax credit you have coming.
For example, suppose your income ended up lower than estimated, or you added a dependent. In that case, your actual credit will likely exceed advance payments of the premium tax.
Are there limits on repayment if I got excess credits?
Yes, the IRS understands that errors in estimated income can happen. Under the American Rescue Plan Act, repayment limits exist based on your household income if you received too much advance credit:
- Under 200% of the federal poverty level – no repayment
- Between 200-400% – capped repayment
- Over 400% – full repayment
So, your repayment may be reduced or eliminated based on your final 2022 income.
5 key benefits when you complete form 8962 accurately
Here are valuable reasons to get it right:
- Receive your full premium tax credit amount
- Avoid owing the IRS for excess advance payments
- Maximize your tax refund
- Prevent tax return delays or penalties
- Verify information on your form 1095-A
Getting every dollar you deserve makes Form 8962 well worth your careful attention.
Common mistakes to avoid
Some common errors to sidestep when filing include:
- Forgetting to attach it to your Form 1040
- Using incorrect income amounts
- Missing a family member on the form
- Entering premium details inaccurately
- Using outdated form versions
Consult a tax expert if you need assistance!
What if I don't file form 8962 with my federal tax return?
If you are eligible for the premium tax credit, you need to complete Form 8962 with your tax return. If you don’t file it, you may lose out on receiving the payment of the premium credits. Please complete this form to ensure timely processing of your tax return and receiving any tax refunds you may be owed. It’s essential to ensure you accurately complete the form to receive the benefits you’re entitled to.
Key Takeaways:
Taxpayers should follow the IRS 8962 instructions when filling out Form 8962, Premium Tax Credit, to calculate and claim this important credit accurately. Form 8962 is used to reconcile the amount of advanced premium tax received during the year with the total credit amount qualified for based on final income and household figures. Taxpayers must also provide complete and accurate information from Form 1095-A, which details insurance coverage and monthly premium payments. Adhering to all the requirements allows taxpayers to correctly determine their eligibility for the premium tax assistance while avoiding potential repayment issues or penalties.
