Premium Tax Credit: Claiming the Credit and Reconciling Advance Credit Payments

• Reporting Changes in Circumstances
• Filing a Federal Tax Return to Claim and Reconcile the Credit
• Failing to file your tax return may prevent future advance credit payments

When you apply for assistance to help pay the premiums for health coverage through the Marketplace, the Marketplace will estimate the amount of the premium tax credit that you may be able to claim for the tax year using information you provide about your family composition, your projected household income, whether those that you are enrolling are eligible for other non-Marketplace coverage, and certain other information.

Based on the estimate from the Marketplace, you can choose to have all, some, or none of your estimated credit paid in advance directly to your insurance company on your behalf to lower what you pay out-of-pocket for your monthly premiums. These payments are called advance payments of the premium tax credit or advance credit payments. If you do not get advance credit payments, you will be responsible for paying the full monthly premium.

If you received the benefit of advance credit payments, you must file a tax return to reconcile the amount of advance credit payments made on your behalf with the amount of your actual premium tax credit. You must file an income tax return for this purpose even if you are otherwise not required to file a return.

If you choose not to get advance credit payments, you can claim the full benefit of the premium tax credit that you are allowed when you file your tax return. This will increase your refund or lower the amount of tax that you would otherwise owe.

Reporting Changes in Circumstances 

If you purchased health insurance coverage through the Marketplace and get assistance in paying premiums through advance credit payments made on your behalf, it is important to report life changes to the Marketplace throughout the year.  

Reporting these changes promptly will help you get the proper type and amount of financial assistance. Reporting changes also will help you avoid large differences between the advance credit payments made on your behalf and the amount of the premium tax credit you are allowed when you file your tax return, which may affect your refund or balance due when you file your tax return.

Changes in circumstances that can affect the amount of your actual premium tax credit include:

• Increases or decreases in your household income including lump sum payments like a lump sum payment of Social Security benefits
• Marriage
• Divorce
• Birth or adoption of a child
• Other changes affecting the composition of your tax family
• Gaining or losing eligibility for government sponsored or employer sponsored health care coverage
• Moving to a different address

For the full list of changes you should report, visit HealthCare.gov.

To estimate the effect that changes in your circumstances may have upon the amount of premium tax credit that you can claim - see this change in circumstances estimator. 

Filing a Federal Tax Return to Claim and Reconcile the Credit 

If you received the benefit of advance credit payments, you must file a tax return and use a Form 8962, Premium Tax Credit (PTC)  to reconcile the amount of advance credit payments made on your behalf with the amount of your actual premium tax credit. You must file an income tax return for this purpose even if you are otherwise not required to file a return.

You must file a federal income tax return and attach Form 8962, Premium Tax Credit (PTC) to the return if:

• Advance credit payments were paid to your health insurer for you or another individual in your tax family
• Advance credit payments  were paid for an individual, including you, for whom you told the Marketplace you would claim a personal exemption and no one, including you, claims a personal exemption for that individual
• You choose to claim the premium tax credit

For Information about how to fill out this form, see the instructions for Form 8962. See Publication 974 for additional instructions for taxpayers in special situations.

If the premium tax credit computed on your return is more than the advance credit payments made on your behalf during the year, the difference will increase your refund or lower the amount of tax you owe. This will be reported in the ‘Payments’ section of Form 1040.

If the advance credit payments are more than the amount of the premium tax credit you are allowed, you will add all or a portion of the excess advance credit payments made on your behalf to your tax liability by entering it in the ‘Tax and Credits’ section of your tax return. This will result in either a smaller refund or a larger balance due. 

The amount of your excess advance credit payments that you are required to repay may be limited based on your household income and filing status. If your household income is 400 percent or more of the applicable federal poverty line, you will have to repay all of the advance credit payments. The repayment limits are listed in the table below.

Repayment Limitation Table for 2015
Household Income Percentage of Federal Poverty Line	Limitation Amount for Single	Limitation Amount for all other filing statuses
Less than 200%	$300	$600
At least 200%, but less than 300%	$750	$1,500
At least 300%, but less than 400%	$1,250	$2,500
400% or more	No limit	No limit

If your filing status is Married Filing Separately, the repayment limitation above applies to both spouses separately based on the household income reported on each return.

The Marketplace will send you, by January 31 of the year following the year of coverage, a Health Insurance Marketplace statement, Form 1095-A This form shows the amount of the premiums for the health care plan or plans you and your family members enrolled in and certain other information you will need to compute your premium tax credit. Form 1095-A also reports any advance credit payments made on your behalf. You use this information to compute your premium tax credit and to compare any advance credit payments made on your behalf with the amount of your actual premium tax credit. For more information about Form 1095-A see Health Insurance Marketplace Statements.

If you also receive Form 1095-B or 1095-C, which are unrelated to the Marketplace, see ourquestions and answers for information about how these forms affect your tax return.

Whether you are reconciling advance credit payments with the credit you are allowed, or are claiming the credit, you should consider e-filing your tax return, because using tax preparation software is the best way to file a complete and accurate tax return.

For the 2014 taxable year, the IRS provided penalty relief from the failure to pay penalty and the under-payment of the estimated tax penalty under certain circumstances.

Corrected, Incorrect or Voided Forms 1095-A for Tax Years 2014 and 2015

Some taxpayers may receive a corrected or voided Form 1095-A because the information on the initial form was incorrect or incomplete. For more information on what you need to do with a corrected or voided Form 1095-A, see Corrected, Incorrect or Voided Forms 1095-A for Tax Years 2014 and 2015. This information can help you assess whether you should file an amended tax return.

Failing to file your tax return may prevent future advance credit payments 

If you choose to get the benefit of advance credit payments, you must file your tax return as soon as possible to ensure you can get advance credit payments made on your behalf from your Marketplace in future years. If you miss the April filing deadline or receive an extension to file until October, you should file your return as soon as possible. You should not wait to file. File as soon as possible to reconcile any advance credit payments made on your behalf and to maintain your eligibility for future premium assistance.

If advance credit payments are made on behalf of you or an individual in your family, and you do not file a tax return, you will not be eligible for advance credit payments or cost-sharing reductions to help pay for your Marketplace health insurance coverage in future years. This means you will be responsible for the full cost of your monthly premiums and all covered services. In addition, we may contact you to pay back some or all of the advance credit payments that are made on behalf of you or an individual in your family.

If advance credit payments were made on behalf of you or an individual in your family, and you did not file a tax return to reconcile those payments, you will not be eligible for advance credit payments or cost-sharing reductions to help pay for your Marketplace health insurance coverage the next year.