Henry v. Comm’r T.C. Memo. 2023-2| January 5, 2023|
Ashford, J. | Dkt. No. 18832-18

Summary: From early 2015 and through 2016 Marie Henry (“Henry”) was unemployed and in a terrible financial, physical, and mental state. To get by, she made early withdrawals from a retirement plan. She was enrolled in health insurance coverage provided by Blue Cross Blue Shield (Blue) for the first 11 months of 2016 through the Health Insurance Marketplace (Marketplace).  The Marketplace determined that Henry was eligible for premium tax credit and the Advanced Premium Tax Credit for her coverage, so she received the benefit of monthly APTC payments, totaling $7,205. The Marketplace sent to the IRS and to petitioner a 2016 Form 1095−A, Health Insurance Marketplace Statement, which reflected Henry’s coverage information under Blue.

The letter directed her to file a tax return if the form showed she received the benefit of the APTC and complete and attach to the return Form 8962, Premium Tax Credit (PTC), which is used to figure the amount of PTC and reconcile it with the APTC. Henry filed a 2016 Form 1040, U.S. Individual Income Tax Return, reporting or claiming: head of household, one exemption for herself and one dependency exemption for her son, total income (and adjusted gross income (AGI)) of $91,274 (consisting of taxable pensions and annuities of $68,750 and taxable Social Security benefits of about $26,524), itemized deductions, income tax withholding from the pensions, and claimed refund of $5,846.
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Preclusion For Deficiency Determination, IRS Form 8962 And Premium Tax Credit

Manzolillo v. Comm’r, T.C. Memo. 2022-107 | October 24, 2022 | Kerrigan, J. | Dkt. No. 25481-16

Summary: This case regards a deficiency of $4,750 for 2015 based on advance premium tax credit (APTC) benefits that were applied against George Manzolillo and Lucy Manzolillo’s (Petitioners) monthly health insurance premium. Before their marriage on May 16, 2015, Petitioners separately enrolled in health insurance for taxable year 2015 through Aetna Life Insurance Company, which they purchased through the Health Insurance Marketplace. Petitioner husband elected to receive APTC payments of $640 per month for 12 months for a total annual credit of $7,680. Petitioner wife similarly elected to receive APTC payments of $90 for three months—January 1 to March 31, 2015— totaling $270 for the year. Petitioners received a combined APTC benefit of $7,950 in 2015.

This amount was paid directly to Petitioners’ insurance company and applied to the cost of their 2015 health insurance premiums. Petitioners timely filed a joint income tax return. They attached to their return Form 8962, Premium Tax Credit, which is used to reconcile the amount of APTC benefit received with the amount the taxpayer was entitled to receive. They reported modified adjusted gross income (MAGI) and claimed a $4,515 PTC for 2015. They claimed erroneously that $3,200 had been paid on their behalf; it was in fact $7,950. Petitioners elected the alternative calculation for year of marriage but failed to complete Part V of Form 8962. After submission of additional information to the IRS, the IRS issued Petitioners a previously frozen refund of $4,187 plus interest.

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Health Care And Taxes

Failing to file Form 8962, Premium Tax Credit, to reconcile 2019 advance payments of the premium tax credit may affect return processing, and delay the taxpayer’s refund. It may also affect their 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.

What is the premium tax credit?

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.
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Another case (see below)* addresses a couple receiving an advance Premium Tax Credit (PTC) of a large amount and having to pay it all back. They also note that if they had known they would have to pay it back, they would not have taken the insurance. The cost of the insurance for this California couple was 20%  of pre-tax household income. That’s a lot!

For context, if this couple lives in San Jose, rent for a one-bedroom apartment starts at $2,000/month or 33% of the couple’s pre-tax income! Read More

I think it is correct to say that all taxpayers are affected by the Affordable Care Act in some way. Certainly individuals living in the US.  All must answer a question on the 1040 as to whether everyone in the “shared responsibility family” (basically those listed on the return), had health coverage for all months of the year. If there are any uncovered months, the next step is to see if an exemption applies for that month. If no exemption for any month, a penalty is computed and reported on the 1040. Read More

Milton Boothe

To be eligible for the Premium Tax Credit under the Affordable Care Act, all of the following must apply:

• Your income must be between 100% and 400% of Federal Poverty Line (see below) 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.

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TaxConnections Member Milton Boothe

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 Read More

When applying for insurance through a state or the federal health insurance marketplace, you will be asked to provide an estimate of your household income for 2016. Your household income is a key factor in determining if you are qualified for an insurance subsidy called the premium tax credit (PTC). Any premium tax credit that you are entitled to will be computed on your 2016 tax return when it is filed in 2017. However, the insurance marketplace will allow you to reduce your insurance premiums during the year by applying this credit in advance based upon the estimate of your household income you provided when applying for the insurance. This advance is referred to as the advanced premium tax credit (APTC).

It is very important to remember that the PTC is based on the actual family income when your tax return is filed in Read More

Presidential candidate Clinton has called for repeal one of the numerous parts of the Affordable Care Act (aka Obamacare).  Reuters reports that on September 29, 2015, she called for repeal of the “Cadillac tax” provision that goes into effect starting in 2018 (“Clinton calls for repeal of ‘Cadillac tax’ on healthcare plans,” by John Whitesides, Reuters, 9/29/15).

A few observations on this:

• What happens when one piece of the complete healthcare reform plan is removed? The Cadillac tax raises revenue by imposing an excise tax on certain expensive plans offered to employees (see IRC Section 4980I).  Likely it also is an incentive not to offer these Read More

If you have insurance through the Health Insurance Marketplace, you may be getting advance payments of the premium tax credit. These are paid directly to your insurance company to lower your monthly premium. Changes in your income or family size may affect your premium tax credit. If your circumstances have changed, the time is right for a mid-year checkup to see if you need to adjust the premium assistance you are receiving. You should report changes that have occurred since you signed up for your health insurance plan to your Marketplace as they occur.

Changes in circumstances that you should report to the Marketplace include:

• an increase or decrease in your income Read More

As we all know by now, the US Supreme Court upheld the government regulations that provide that an otherwise qualified individual who obtains health insurance through the federal exchange (rather than a state exchange) is entitled to a Premium Tax Credit (PTC). This is the 6/25/15 decision in King v Burwell. I think this is the logical ruling because the Act does provide that if a state doesn’t create an exchange, the Department of Health and Human Services (HHS) is to establish one. Also, since this is the “Affordable Care” Act we are talking about, the PTC is a key part that helps make insurance affordable for many who have household income at or below 400% of the federal poverty line (more so for younger people in regions where the cost of living is not high – not for all individuals).

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The Premium Tax Credit (PTC) for individuals who purchased health insurance on the Exchange (Marketplace) is an important tax break. As income goes up, this subsidy in the form of a refundable credit decreases. Then, it hits a cliff and completely disappears if one’s household income exceeds 400% of the Federal poverty line (FPL). This can result in a tax bill of thousands of dollars!

Here is an example. A married couple, both age 64, thought their 2014 income would be about $62,000. Being eligible for insurance on the Exchange, they purchased a policy and obtained a PTC of $14,112. When they file their return, they realize they actually have $63,000 of income for 2014. this is above 400% of the FPL so they must repay all of the $14,112 PTC! If they can drop their income to $62,040 (400% of the FPL for 2014), they Read More