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What Is The Premium Tax Credit (PTC)?



What Is The Premium Tax Credit (PTC)?

Premium Tax Credit (PTC)

The PTC is a tax credit for certain people who enroll, or whose family member enrolls, in a qualified health plan. The credit provides financial assistance to pay the premiums for the qualified health plan offered through a Marketplace by reducing the amount of tax you owe, giving you a refund, or increasing your refund amount. You must file Form 8962 to compute and take the PTC on your tax return.

Advance payment of the premium tax credit (APTC)

APTC is a payment during the year to your insurance provider that pays for part or all of the premiums for a qualified health plan covering you or an individual in your tax family. Your APTC eligibility is based on the Marketplace’s estimate of the PTC you will be able to take on your tax return. If APTC was paid for you or an individual in your tax family, you must file Form 8962 to reconcile (compare) this APTC with your PTC. If the APTC is more than your PTC, you have excess APTC and you must repay the excess, subject to certain limitations. If the APTC is less than the PTC, you can get a credit for the difference, which reduces your tax payment or increases your refund.

Changes in circumstances

 The Marketplace determined your eligibility for and the amount of your 2020 APTC using projections of your income and the number of individuals you certified to the Marketplace would be in your tax family (yourself, spouse, and dependents) when you enrolled in a qualified health plan. If this information changed during 2020 and you did not promptly report it to the Marketplace, the amount of APTC paid may be substantially different from the amount of PTC you can take on your tax return. See Report changes in circumstances when you re-enroll in coverage and during the year, earlier, for changes that can affect the amount of your PTC.

Deductions for health insurance premiums

You cannot deduct the portion of your health insurance premium on your tax return that is paid for by the PTC or APTC (after you determine how much of any excess APTC you must repay). If you are deducting medical expenses as an itemized deduction, see Pub. 502, Medical and Dental Expenses. If you are claiming the self-employed health insurance deduction, see Pub. 974, Premium Tax Credit.

Form 1095-A, Health Insurance Marketplace Statement

You will need Form 1095-A to complete Form 8962. The Marketplace uses Form 1095-A to report certain information to the IRS about individuals who enrolled in a qualified health plan through the Marketplace. The Marketplace sends copies to individuals to allow them to accurately file a tax return taking the PTC and reconciling APTC. For coverage in 2020, the Marketplace is required to provide or send Form 1095-A to the individual(s) identified in the Marketplace enrollment application by January 31, 2021. If you are expecting to receive Form 1095-A for a qualified health plan and you do not receive it by early February, contact the Marketplace.

Under certain circumstances, for example, where two spouses enroll in a qualified health plan and divorce during the year, the Marketplace will provide Form 1095-A to one taxpayer, but another taxpayer will also need the information from that form to complete Form 8962. The recipient of Form 1095-A should provide a copy to other taxpayers as needed.

VOID BOX

If you received a Form 1095-A with the void box checked at the top of the form, that means you previously received a Form 1095-A for the policy shown in Part I that was sent in error. You should not have received a Form 1095-A for the policy shown in Part I of the Form 1095-A. Do not use the information on the Form 1095-A with the void box checked or the previously received Form 1095-A to complete Form 8962.

CORRECTED BOX

If you receive a Form 1095-A with the corrected box checked at the top of the form, use the information on the Form 1095-A with the corrected box checked to figure the PTC and reconcile any APTC on Form 8962. Do not use the information on the original Form 1095-A you received for the policy shown in Part I of the corrected Form 1095-A.

Additional information

For additional information on the PTC, see Pub. 974, Premium Tax Credit. You can also visit IRS.gov and enter “premium tax credit” in the search box.

Also see How To Avoid Common Mistakes in Completing Form 8962 at the end of these instructions.

Who Must File

You must file Form 8962 with your income tax return (Form 1040, 1040-SR, or 1040-NR) if any of the following apply to you.

  • You are taking the PTC.
  • APTC was paid for you or another individual in your tax family.
  • APTC was paid for an individual you told the Marketplace would be in your tax family and neither you nor anyone else included that individual in a tax family. See Individual you enrolled who is not included in a tax family under Lines 12 Through 23—Monthly Calculation, later.

If any of the circumstances above apply to you, you must file an income tax return and attach Form 8962 even if you are not otherwise required to file. You must use Form 1040, 1040-SR, or 1040-NR. For help determining which of these forms to file, see the Instructions for Forms 1040 and 1040-SR or the Instructions for Form 1040-NR.

.This is an Image: caution.gifIf you are filing Form 8962, you cannot file Form 1040-SS or 1040-PR..

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