Out of Scope:
- Part IV – Shared Policy Allocation
- Part V – Alternative Calculation for Year of Marriage
Marketplace/Exchange purchase (Form 8962)
If you answer “YES” to the Marketplace question, Form 8962 will be added to the return. Enter data as requested.The taxpayer may be eligible for a Premium Tax Credit or may have to repay some or all of any Advanced PTC, which will be calculated.
- Where asked for dependent’s modified AGI, that only applies to those dependents on the taxpayer’s return who filed a return for reasons other than to have withholding or estimated payments refunded.
- Note that Parts 4 and 5 are OUT OF SCOPE .
Advance Payment of PTC:
When signing up in the Marketplace, the client estimates their income and may receive a monthly advance payment (to the Marketplace) of their estimated PTC. The amount received by the marketplace will be shown on the client’s Form 1095-A and is entered on the Form 8962 along with the premium information.
Note: if filing MFS, only copy the APTC amounts (Column F).
- If the actual advanced payment is less than the calculated amount, the additional carries over to Form 1040 line 69 as a credit.
- If the actual advanced payment is more than the calculated amount, the excess carries over to Form 1040 line 46 as an additional tax.
- If household income is over 400% of FPL, all the APTC must be repaid. There are a few permissible strategies taxpayers may consider to lower household income:
- If taxpayers are newly married, can the alternative marriage calculation prevent or reduce repayment for the months before marriage? ( OUT OF SCOPE )
- If the taxpayer does not have a retirement plan offer through their employer, could the taxpayer contribute to a traditional IRA and claim the adjustment to reduce income?
- Consider filing as Married Filing Separately. The credit will be disallowed, but the repayment cap will apply based on only that spouse’s income.
- For additional insights, see the APTC Repayment Tips.
Adjust medical deductions on Schedule A
The adjustment is made in the same tax year and TaxSlayer does not do this automatically.
If APTC must be repaid, the taxpayer will have effectively paid more for health insurance, so the repayment amount can be added to the medical deduction.
If PTC is received, the taxpayer will be getting a refund of premiums paid for health insurance, so the PTC amount should be subtracted from the medical deduction for those premiums.