The Premium Tax Credit, under the Affordable Care Act, is a refundable tax credit that helps eligible people with moderate incomes afford health insurance purchased through the Health Insurance Marketplace.
If you are eligible for the credit, you can choose to:
• Get it now: Have some or all of the estimated credit paid in advance on your behalf directly to your insurance company, to lower what you pay out-of-pocket for your monthly premiums during 2015. These payments are called advance payments of the premium tax credit.
• Get it later: Wait to get the credit when you file your 2015 tax return in 2016. This means, then, that no advance payments would be made to your insurance provider during the year.
Advance credit payments made to your insurance company are based on an estimate of the credit that you will claim on your federal income tax return. The Marketplace estimates the credit by using information about your family composition and projected income that you provide when you submit your application.
To be eligible for the Premium Tax Credit, all of the following must apply:
• Your income must be between 100% and 400% of Federal Poverty Line for a given family size.
• You cannot be claimed as a dependent.
• If married, you must file a joint return (although some exceptions may apply).
• You must be enrolled in a qualified health plan through Marketplace.
• Cannot be eligible for other minimum essential coverage.
• Premiums must be paid.
The primary objective of this article is to empower taxpayers with tax knowledge. For more information on the Affordable Care Act, grab yourself a copy of “Doing Your Own Taxes is as Easy as 1, 2, 3” ($6.98) on TaxConnections.com.