What IRS Form 8962 (2017) Is For
IRS Form 8962 (2017) is used to calculate the premium tax credit for individuals and families who purchased health insurance through the health insurance marketplace. It must report these amounts on its federal income tax return. The form determines whether you can claim a tax credit, must reconcile an advance premium tax credit, or need to adjust amounts reported on Form 1095-A for a qualified health plan.
When You’d Use IRS Form 8962 (2017)
This form is required whenever taxpayers must reconcile marketplace coverage and premium tax credits.
- Claiming the premium tax credit: This applies when you purchased a qualified health plan through the health insurance marketplace and want to use the credit on your federal income tax return.
- Reconciling advance payments: This applies when you received advance premium tax credit amounts and must compare them with your final household income for the tax year.
- Correcting a prior filing through an amended return: This applies when you must update premium tax credit calculations because income, a family member, or family composition has changed.
- Submitting a late federal income tax return: This applies when you file after the deadline and must still attach the form to reconcile advance payment amounts for marketplace coverage.
If you encounter issues with premium tax credits or need help with IRS correspondence, IRS tax relief services can provide the guidance and advocacy you need.
Key Rules or Details for the 2017 Tax Year
Several essential eligibility criteria and year-specific rules shaped how IRS Form 8962 (2017) was completed.
- Household income range: This requirement is based on the federal poverty level established by the Department of Health and Human Services for the applicable family size.
- A family member must be enrolled in a marketplace plan: This rule applies when a qualified health plan from the ACA marketplaces is the source of coverage for any member of the tax household.
- Filing status rules for eligibility: This applies to married taxpayers who generally must file jointly, unless they qualify for limited exceptions outlined under the Affordable Care Act (ACA).
- Advance payments: This ensures that any difference between the allowed premium tax credit and the advance payment amounts is correctly accounted for in a refund or tax liability.
- QSEHRA benefits may reduce the credit amount: This applies to workers whose employers offered reimbursement arrangements that must be factored into the final credit amount for the tax year.
Step-by-Step (High Level)
Completing IRS Form 8962 (2017) involves reviewing marketplace statements and calculating eligibility for premium tax credits.
- Gather the required forms and marketplace details: This includes obtaining your Health Insurance Marketplace statement (Form 1095-A) and gathering all necessary information to file your federal income tax return.
- Calculate household income and family composition: This step ensures that your annual income and household size are accurately reflected, supporting accurate credit eligibility.
- Determine your expected contribution based on your income: This calculation uses poverty guidelines to assign a percentage of your annual income when determining the expected monthly contribution.
- Find the correct benchmark premium for the lowest cost silver plan: This requires checking marketplace tools to verify the second-lowest silver plan premium when your form lists incomplete or inaccurate data.
- Reconcile advance payments with allowed credits: This step compares advance payment amounts with the final credit amount to determine whether you qualify for a refund or must pay additional taxes.
If your tax return results in a balance due, it’s important to understand the IRS collection process to resolve any payments or avoid penalties.
Common Mistakes and How to Avoid Them
Several recurring errors lead to incorrect premium tax credit reporting and IRS notices.
- Using incorrect marketplace data: Taxpayers should verify all information on Form 1095-A because inaccurate silver plan premiums can lead to substantial reconciliation errors.
- Reporting the wrong household income: Taxpayers should ensure that every income source is accurately reported; this is especially important for gig workers and the self-employed, whose earnings may fluctuate throughout the year.
- Failing to update family composition changes: Taxpayers should verify that all dependents and family members are reported accurately, as these details directly impact eligibility criteria and the amount of credits.
- Ignoring marketplace corrections or revised forms: Taxpayers should use corrected marketplace statements when available because earlier versions may contain inaccurate premiums or coverage months.
- Not addressing advance payment discrepancies: Taxpayers should review all monthly entries in Part III because incorrect reporting can increase tax liability or reduce an expected refund.
For amended or late filings related to premium tax credits, seek assistance with unfiled individual returns to ensure everything is complete and compliant.
What Happens After You File
Once IRS Form 8962 (2017) is submitted with your federal income tax return, the IRS reviews your calculation of the premium tax credit and reconciles it with the advance payment amounts provided during the tax year. If you qualify for additional credit, the amount is added to your refund. If excess advance payments were issued, you may be required to pay part of the difference, depending on your income and other factors. The IRS may request clarification when marketplace or income records do not match the information on the return.
FAQs
How does IRS Form 8962 affect my health insurance?
IRS Form 8962 determines whether your premium tax credit matches the cost of your marketplace health insurance based on your annual income and household size. The form also reconciles advance payments to confirm whether you received the correct amount of financial assistance for your qualified health plan.
Do I need to file IRS Form 8962 with my federal income tax return?
You must file IRS Form 8962 with your federal income tax return if you received advance payments for the premium tax credit or want to claim the credit for the tax year. Without this form, the IRS cannot verify your eligibility or calculate your final refund or tax liability.
What if my health insurance marketplace sends incorrect information?
If your marketplace issues an incorrect Form 1095-A, you must request a corrected version before completing IRS Form 8962. Using accurate premium and coverage details is essential because incorrect benchmark plan data can change your premium tax credit amount and delay IRS processing.
How did the American Rescue Plan Act affect premium tax credits?
The American Rescue Plan Act expanded premium tax credits for several tax years by increasing available financial assistance and reducing expected contributions. Although IRS Form 8962 (2017) follows earlier rules, the act influenced future years by providing enhanced premium tax credits and lowering costs for many marketplace enrollees.
