What IRS Form 8962 (2025) Is For
IRS Form 8962 (2025) is used to calculate the premium tax credit for eligible taxpayers who enrolled in a health insurance marketplace plan and need to reconcile advance monthly payments with the actual credit allowed on their federal income tax return. This refundable tax credit helps lower the cost of health insurance premiums, and the form determines the correct credit amount based on household income and other eligibility requirements.
For step-by-step walkthroughs and additional IRS form instructions, visit our IRS Form Help Center.
When You’d Use IRS Form 8962 (2025)
This section explains the situations that require a taxpayer to file IRS Form 8962 (2025).
- You received advance payments of the premium tax credit: This applies when the Marketplace paid monthly amounts toward your health plan, and you must reconcile those advance payments on your tax return.
- You purchased health insurance through the Marketplace without advance payments: This applies when you want to claim the premium tax credit after paying full premiums and need to calculate the credit on your federal income tax return.
- A household member being enrolled with incorrect information: This applies when a family member receives marketplace coverage and you claim them as a dependent on your tax return, which requires you to file the form.
- You filed a prior return with incorrect information: This applies when an amended return is needed to correct income, coverage detail, or marketplace plan data that affect the actual credit amount.
Key Rules or Details for Tax Year 2025
This section outlines the major rules that affect premium tax credit eligibility as per IRS Form 8962 (2025).
- Income rules tied to the federal poverty line: This rule determines eligibility by requiring household income to fall within a specific range of the federal poverty line for the family size.
- Affordability rules for employer coverage: This rule examines whether employer coverage is considered affordable and whether access to that coverage prevents a taxpayer or family member from qualifying for the premium tax credit.
- Changes in coverage month criteria: This rule counts a month as a coverage month even if full premiums were not paid when specific requirements, such as grace periods or state directives, are met.
- Limits for married filing separately: This rule generally prevents taxpayers from claiming the credit unless they qualify for exceptions involving domestic abuse or spousal abandonment.
- Household income and modified AGI requirements: This rule ensures that all required income sources are included when determining the premium tax credit and establishing eligibility for the full credit.
Verify your income history and reported tax data easily with our IRS Account Transcript Service.
Step-by-Step (High Level)
This section summarizes the main steps required to complete IRS Form 8962 (2025).
- Gather Form 1095-A and verify enrollment information: This step ensures that all premiums, SLCSP amounts, and monthly marketplace payments listed on Form 1095-A are correct before entering them on the tax form.
- Determine your tax family and household income: This step identifies the individuals included on your return and calculates the income used to determine your expected contribution toward monthly premiums.
- Calculate monthly contribution amounts: This step establishes the amount you are responsible for paying each month by applying your applicable figure to your household income.
- Enter premiums and second-lowest-cost silver plan values: This step compares your monthly premium with the second-lowest-cost silver plan to determine the credit for each coverage month.
- Reconcile advance payments and review repayment amounts: This step identifies the difference between advance payments and the actual credit and determines if additional credit is available or repayment is required in Part III.
Common Mistakes and How to Avoid Them
This section identifies frequent errors taxpayers make when completing IRS Form 8962 (2025).
- Forgetting to file Form 8962: This mistake causes the IRS to reject the tax return; taxpayers should always include the form when marketplace coverage or advance payments were issued.
- Using incorrect Form 1095-A data: This mistake occurs when outdated or inaccurate information is entered; taxpayers should verify every premium and SLCSP amount on the most recent version of Form 1095-A.
- Misreporting household income or dependent income: This mistake affects eligibility and credit amounts; taxpayers should include all required income sources for every person who must file their own return.
- Entering incorrect SLCSP amounts: This mistake occurs when the second-lowest-cost silver plan amount is missing or inaccurate; taxpayers should use marketplace tools to confirm the correct figure.
- Ignoring allocation rules for shared policies: This mistake occurs when multiple families share a single plan; taxpayers should follow allocation instructions to report premiums and credits correctly.
For one-on-one assistance with IRS Form 8962, marketplace reconciliations, or tax credit questions, start your case review with our trusted team today.
What Happens After You File
Once IRS Form 8962 (2025) is submitted with the federal income tax return, the IRS reviews all marketplace data and verifies that the premium tax credit calculation matches the information reported on Form 1095-A. The IRS may adjust the return if discrepancies are found, which can impact the final refund or tax liability. Taxpayers may be asked to provide additional information if enrollment data, coverage months, or income details require clarification for the final determination.
FAQs
What form do I need to use for reconciling advance payments?
You must use IRS Form 8962 to reconcile any advance payments received for marketplace coverage on your federal income tax return.
What happens if my Form 1095-A is missing?
You must request a new Form 1095-A from the Health Insurance Marketplace because the IRS requires the information to calculate the premium tax credit.
Can I claim the credit if I did not receive monthly payments?
Yes, you can claim the premium tax credit when you file your tax return if you purchased marketplace insurance and meet eligibility requirements.
Does my household income affect the credit?
Yes, the premium tax credit is based on household income compared to federal poverty line percentages and affects both eligibility and credit amounts.
Do I need Form 8962 if my dependent used Marketplace coverage?
Yes, you must file the form if a dependent is enrolled in marketplace coverage and you are claiming that person on your tax return.
