What Form 1099-H Is For
Form 1099-H reports Health Coverage Tax Credit advance payments made on your behalf during the 2020 calendar year. The Internal Revenue Service uses this information return to show the total amount of HCTC payments sent directly to your health insurance company. Eligible recipients under Trade Adjustment Assistance, Alternative TAA, Reemployment TAA, and the Pension Benefit Guaranty Corporation receive this form to report payments and complete their federal income tax return accurately.
When You’d Use Form 1099-H
You use Form 1099-H when filing your income tax return for 2020 if you receive advance payments through the HCTC Program. This form helps you report advanced payments accurately and confirm eligibility according to specific instructions for the tax year. You typically file it when preparing amended tax forms or completing the tax filing process involving reimbursement credits or any remaining tax credits.
Key Rules or Details for 2020
- Eligibility rules: You qualify for the Health Coverage Tax Credit when you receive Trade Adjustment Assistance benefits or payments from the Pension Benefit Guaranty Corporation, and you meet all IRS reporting requirements. You must use your Social Security Number or Taxpayer Identification Number to ensure accuracy when filing.
- Qualified health plans: Your health plan must meet HCTC Program standards, and the IRS form requires reporting only qualified premiums paid directly to the health insurance company. You must verify that your health coverage matches the general instructions for certain information returns.
- Percentage of premiums covered: The HCTC Program pays 72.5 percent of qualified health insurance premiums through advance payments, and you must pay the remaining share. This helps eligible individuals save money on monthly costs tied to receiving benefits.
- Monthly eligibility checks: Your eligibility is determined by your status on the first day of each month, and advance payments received are listed in specific boxes on the form. You must accurately report each month to comply with IRS filing information rules.
- Employer coverage limits: You cannot claim the tax credit when employer contributions cover at least half of your health insurance premiums, and the balance includes pre-tax payroll deductions. You must review your job loss status and benefits when determining eligibility.
- Recordkeeping requirements: You must keep tax documents, notices, resources, and receipts for at least three years after filing your taxes. This supports accurate reporting, compliance with the Privacy Act, and correct future reference to benefits paid.
Browse more tax form instructions and filing guides in our Forms Hub.
Step-by-Step (High Level)
Step 1: Receive Form 1099-H
You receive Form 1099-H from your health insurance company or the HCTC Program early in the calendar year, and it lists the total amount of advance payments received. You must review the form carefully to ensure accuracy and confirm that all identifying information matches your Social Security Number and address.
Step 2: Gather supporting documents
You collect tax documents such as premium statements, HCTC payment records, reimbursement credits paid, and employer health coverage details before filing. These documents help you accurately report payment amounts and verify eligibility for reimbursement credits or additional tax credit amounts on your federal income tax return.
Step 3: Complete Form 8885
Form 8885 requires entering premiums paid, reporting advance payments, and confirming eligibility as an eligible recipient. This form helps you claim the Health Coverage Tax Credit correctly and ensures accuracy when preparing your income tax return for the tax year.
Step 4: Reconcile advance payments
You compare the advance payments listed on Form 1099-H with your health insurance premiums for each month during the calendar year. This step ensures accuracy, allowing you to report advanced payments correctly and avoid errors that may affect the amount owed or credits applied.
Step 5: Include Form 8885 with your tax return
You file Form 8885 with your federal income tax return to report HCTC advance payments and any reimbursement credits. This step confirms compliance with IRS reporting requirements and verifies that you include all necessary tax forms in the tax filing process.
Step 6: Attach required documentation
You attach proof of premiums paid, receipts from the health insurance company, and eligibility documents from Trade Adjustment Assistance or PBGC benefits. These documents help the IRS verify your claim and ensure accuracy for certain individuals filing information returns.
Learn more about federal tax filing through our IRS Form Help Center.
Common Mistakes and How to Avoid Them
- Missing Form 8885: Some individuals forget to include Form 8885 when reporting advance payments, which delays IRS processing. You can avoid this mistake by checking that all required tax documents are included before submitting your tax return.
- Incorrect premium reporting: Some taxpayers report full premiums instead of separating advance payments from amounts they pay directly. You can avoid this by following IRS instructions and matching your entries to the amounts listed on the form.
- Using ineligible coverage: Some individuals include health plans that do not qualify for the tax credit. You can avoid this issue by confirming that your health plan meets HCTC Program requirements before filing.
- Incorrect employer coverage entries: Some taxpayers claim the credit even when employer contributions exceed allowed limits. You can prevent this issue by verifying employer payment details and excluding months with disqualifying contributions.
- Missing identification details: Some recipients submit forms with incorrect Social Security Numbers or Taxpayer Identification Numbers. You can avoid this by reviewing your IRS form for complete and accurate identifying information before filing.
Learn more about how to avoid business tax problems in our guide on How to File and Avoid Penalties.
What Happens After You File
Once you file your 2020 income tax return with Form 8885 and Form 1099-H details, the IRS verifies all HCTC payments and information returns submitted on your behalf. You may receive additional credit or a balance due depending on the accuracy and benefits reported. The IRS may request additional documents to ensure accuracy, but you remain eligible as long as the filing information aligns with the program rules.
FAQs
How do I use Form 1099-H when completing my income tax return for the HCTC advance payments?
You transfer the amounts from the IRS form to Form 8885 and verify that all premiums match your records. This helps you claim the credit correctly.
How does the health coverage tax credit HCTC affect my tax filing process?
It helps reduce your health insurance premiums through HCTC payments made on your behalf. You must reconcile every payment when filing to ensure accuracy and completeness.
What should I do if I receive a 1099-H but also paid premiums directly to my health plan?
You report both the advance payments and the payments you made directly. Form 8885 helps you claim reimbursement credits for qualified health coverage.
How do HCTC payments appear on Form 1099-H, and what are the reporting requirements?
They appear as monthly amounts paid on your behalf, and you must report them on your federal income tax return using Form 8885.
What if Form 1099-H includes errors in personal information or address details?
You request a corrected version from your health insurance company before filing. This ensures that filing information is accurate and complete.
