What IRS Form 8962 (2024) Is For
IRS Form 8962 (2024) is used to calculate and reconcile the premium tax credit, which helps eligible taxpayers manage the cost of marketplace coverage when filing a federal income tax return. The form determines whether advance payments were accurate by comparing them to the taxpayer’s actual credit based on household income and eligibility requirements. It ensures that taxpayers who purchase health insurance through the health insurance marketplace report the correct premium amounts and receive the refundable tax credit for which they qualify during the tax year.
For expert assistance with IRS Form 8962, Marketplace corrections, or claiming the premium tax credit, start your case review today.
When You’d Use IRS Form 8962 (2024)
This section outlines specific circumstances under which a taxpayer must include IRS Form 8962 (2024) with their tax return.
- Advance payments of the premium tax credit PTC: A taxpayer must file the form if advance payments were made on their behalf to reduce monthly health insurance premiums.
- Claiming the premium tax credit without advance payments: A taxpayer must file the form when requesting the credit as a refundable credit, even if no advance payments were used.
- Marketplace coverage for a dependent or spouse: A taxpayer must complete the form when any eligible person in the household enrolls in marketplace coverage with advance payments.
- Correcting or amending a federal income tax return: A taxpayer must use the form if filing an amended tax form that includes updated marketplace coverage information.
- Ensuring eligibility for future tax years: A taxpayer must include the form because failing to file may affect their ability to qualify for future advance payments under marketplace insurance.
Key Rules or Details for IRS Form 8962 (2024)
This section highlights essential rules that guide taxpayers in using IRS Form 8962 (2024) to determine credit eligibility.
- Household income near or above the federal poverty line: A taxpayer qualifies when income falls within a specific range established by the Department of Health and Human Services, and this income determines how much the taxpayer must contribute to premiums.
- Family affordability criteria for employer coverage: A taxpayer must show that an employer plan does not meet affordability rules to qualify for the premium tax credit.
- Marketplace coverage requirement: A taxpayer may only claim or reconcile the credit when a person in the household is enrolled in a qualified health plan purchased through the health insurance marketplace.
- Filing status rules for a joint return: A married taxpayer generally must file a joint return unless they meet specific circumstances, such as abandonment or abuse.
- Lawful presence criteria: A taxpayer may only claim credit amounts for individuals who meet lawful presence rules and satisfy all filing requirements for the tax year.
You can verify your income and filing history quickly with our IRS Account Transcript Service.
Step-by-Step (High Level)
This section provides a clear overview of how a taxpayer completes IRS Form 8962 (2024) when determining and reconciling credit amounts.
- Determine household income and expected contribution: A taxpayer must calculate household income to determine how much they are expected to contribute toward health insurance premiums for the tax year.
- Use information from Form 1095-A to report monthly premiums: A taxpayer must transfer marketplace premiums, lowest cost silver plan values, and advance payment information from Form 1095-A to ensure the form reflects accurate marketplace coverage details.
- Calculate monthly actual credit amounts: A taxpayer must compare the expected contribution with the cost of the second-lowest-cost silver plan to determine the actual credit for each month.
- Reconcile advance payments with allowable credit: A taxpayer must compare the actual credit with the total advance payments to determine whether additional credit is owed or if repayment is required.
- Complete allocation or special marriage calculations if needed: A taxpayer must finish allocation steps when sharing a health plan with another person or use special marriage rules when married during the tax year.
Common Mistakes and How to Avoid Them
This section identifies frequent errors that may affect a taxpayer’s refund, tax liability, or premium tax credit eligibility.
- Incorrectly transferring Form 1095-A information: A taxpayer should review each premium amount and advance payment entry to ensure they match marketplace records and avoid IRS processing delays.
- Using the incorrect federal poverty line table: A taxpayer must select the correct table for their state and family size to ensure income calculations remain accurate and fall within the proper criteria.
- Missing or incorrect lowest cost silver plan values: A taxpayer must verify Column B values using the IRS lookup tool when marketplace information differs or when the value does not appear on the form.
- Not allocating shared marketplace coverage: A taxpayer should follow allocation instructions when sharing marketplace insurance with a spouse or dependent who is not part of the same tax household.
- Not checking the exception box for specific circumstances: A taxpayer must check the appropriate filing status exception box when filing separately due to particular situations, such as abandonment or abuse.
If you owe repayment after reconciling your premium tax credit, IRS payment plan options can help you manage what you owe.
What Happens After You File IRS Form 8962 (2024)
After a taxpayer files IRS Form 8962 (2024), the IRS matches all reported marketplace information with data supplied by the health insurance marketplace to verify accuracy. The IRS determines whether the taxpayer must repay excess advance payments or whether an additional refundable tax credit is owed. Processing may take longer when marketplace data differs from reported information, and filing the form helps maintain premium tax credit eligibility for future tax years.
FAQs
What determines premium tax credit eligibility for IRS Form 8962 (2024)?
Premium tax credit eligibility depends on factors such as household income, marketplace coverage, filing status, and whether the taxpayer meets all eligibility requirements for claiming credit amounts. The IRS uses marketplace records and income calculations to determine whether a taxpayer qualifies for the refundable tax credit.
How do I calculate household income for IRS Form 8962 (2024)?
Household income includes modified adjusted gross income for the taxpayer, spouse, and any dependent required to file a tax return. This calculation may include nontaxable Social Security benefits and other income adjustments that affect eligibility and expected contribution amounts.
What is the difference between a silver plan and the second-lowest-cost silver plan?
A silver plan refers to general silver-tier marketplace coverage, while the second-lowest-cost silver plan is a specific benchmark used to calculate premium tax credit amounts. This benchmark helps determine the amount of credit the taxpayer can claim based on expected contributions and household income.
How do repayment caps work when reconciling advance payments?
Repayment caps limit the amount of excess advance credit a taxpayer must repay when their income falls within specific ranges. The IRS uses federal poverty line percentages and filing status information to determine the maximum amount the taxpayer must compensate for the tax year.
