Form 8962 (2015) - Premium Tax Credit Reconciliation Checklist
Purpose
Form 8962 reconciles Advance Premium Tax Credit amounts paid during the 2015 tax year with the Premium Tax Credit allowed based on household income and family size. The form applies only when Marketplace coverage existed through the Health Insurance Marketplace and Form 1095-A shows advance credit payments.
Reconciliation determines whether a refundable tax credit is allowed or whether Advance Payments must be repaid on the income tax return. The calculation relies on 2015 federal poverty line percentages and the second-lowest-cost silver plan benchmark used for the Marketplace plan.
Completion Steps
Step 1: Determine tax family size
Determine family size using the number of exemptions reported on the 2015 tax return filed on Form 1040, Form 1040A, or Form 1040NR. This figure establishes which federal poverty level table applies when computing household income percentages.
Dependents do not increase family size beyond the number of exemptions, but their income may affect the household income used for the Premium Tax Credit. The Tax Family generally includes the taxpayer, spouse on a joint return, and any dependents claimed.
Step 2: Calculate modified adjusted gross income
Calculate modified adjusted gross income using the 2015 Form 8962 definition, which starts with adjusted gross income and adds required items. The calculation includes tax-exempt interest, foreign earned income, and excludable U.S. possession income, as directed for 2015.
Use the 2015 worksheets and avoid substituting later-year definitions that may be affected by the Tax Cuts and Jobs Act or subsequent tax rules. A tax professional should confirm addbacks when Social Security benefits or foreign income items complicate the calculation of the final income figure.
Step 3: Add dependents’ modified adjusted gross income when required
Include dependents’ modified adjusted gross income only when a dependent must file an income tax return due to filing thresholds. Add that dependent amount to the taxpayer amount to compute household income for Form 8962.
Do not include dependent income when a dependent files solely to claim a refund of withholding or estimated tax payments. Household income equals the combined total used to compute the federal poverty line percentage.
Step 4: Select the correct federal poverty table
Select the 2015 federal poverty line table based on the state of residence during the tax year, using Alaska, Hawaii, or the other states, and the District of Columbia table. These figures are year-specific and must match the 2015 instructions.
When a residence change involves Alaska or Hawaii, or spouses lived in different states before filing jointly, use the higher federal poverty line amounts. Accuracy here prevents incorrect eligibility conclusions for the tax credit.
Step 5: Compute household income as a percentage of poverty
Divide household income by the applicable federal poverty line and convert the result to a whole percentage. If the result is 401 percent or higher, the Premium Tax Credit is not allowed for 2015.
If the result is below 401 percent, proceed to the applicable percentage table to determine the expected contribution rate. Rounding must follow the 2015 instructions to avoid mismatching table brackets.
Step 6: Locate the applicable figure for the contribution percentage
Use the household income percentage to locate the applicable figure in the 2015 table. This figure represents the expected household share of premiums for a benchmark plan on the Marketplace.
Apply only the 2015 applicable figure table and avoid copying figures from other years. The figure is later used to compute the annual contribution amount and the monthly contribution amount.
Step 7: Choose annual versus monthly calculation
Use the annual method only when Marketplace coverage and benchmark amounts remained unchanged for all months, and the taxpayer can certify stability. Otherwise, complete the monthly method using lines 12 through 23 with amounts from Form 1095-A.
Monthly calculations are required when coverage changes, premium amounts change, household composition changes, or other Marketplace coverage events occur. The second-lowest-cost silver plan amounts in Form 1095-A drive the monthly computations.
Step 8: Indicate shared policy allocation or alternative marriage calculation elections
Check the appropriate indicator when a Marketplace Policy was shared with another tax family or when a marriage occurred during the tax year. Shared coverage requires Part IV allocation, while year-of-marriage relief requires Part V calculations.
These elections have been available since 2014 and require careful entry to prevent mismatched totals. If an allocation or alternative calculation is used, monthly reconciliation is typically required.
Step 9: Reconcile allowed credit and advance payments
Total the Premium Tax Credit allowed and compare it to the Advance Premium Tax Credit payments shown on Form 1095-A. If allowed, credit exceeding advance credit payments results in a refundable tax credit on the tax return.
If advance credit payments exceed the allowed amount, the excess becomes repayment owed. Correct placement depends on whether the return is Form 1040, Form 1040A, or Form 1040NR.
Step 10: Apply repayment limitation rules for excess advance payments
Compute excess Advance Payments when advance credit payments exceed the allowed Premium Tax Credit. Use the 2015 repayment limitation table based on filing status and the federal poverty level percentage.
If the household income is 401 percent or higher, the full excess must be repaid with no cap. When below that threshold, repayment is limited and reported on the applicable income tax return line.
Year-Specific IRS Changes & Requirements
Shared policy allocation in Part IV: Part IV remains required when a Marketplace Policy covers more than one Tax Family, and the same allocation percentage must apply to premiums, SLCSP, and Advance Premium Tax Credit amounts.
Alternative marriage calculation in Part V: Part V remains available for taxpayers who married during 2015 and file jointly, using alternative family size and contribution amounts for pre-marriage months in the monthly reconciliation.
The 2015 tables must be used: The 2015 federal poverty line, applicable figure, and repayment limitation tables are year-specific and cannot be substituted with tables from any other tax year.
Form filing constraints: Form 8962 must be attached to Form 1040, Form 1040A, or Form 1040NR; Form 1040EZ cannot be used when reconciling advance credit payments.
Premium payment requirement: Monthly Premium Tax Credit is not allowed for months where required premiums were unpaid by the tax return due date, excluding extensions, under 2015 tax rules.
Important note: Credits are not allowed for a month when required premiums were not paid by the tax return due date, excluding extensions, under the 2015 tax rules. When errors appear in Marketplace coverage data, a corrected Form 1095-A should be requested through the Marketplace Call Center before filing or amending with Form 1040-X.
Need Help With Your Tax Filing?
If you’re missing tax documents or want to ensure the numbers you enter match IRS records, we can help.
We offer:
- Full IRS transcript retrieval (Wage & Income + Account)
- Professional tax form review
- Preparation & filing support
- Tax relief options if you owe the IRS
Call now before filing: (888) 260-9441
Fast transcript pull available
This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
