IRS Form 8962 (2019): Premium Tax Credit Guide

What IRS Form 8962 (2019) Is For

IRS Form 8962 (2019) is used to calculate and report the premium tax credit that helps individuals and families pay for health insurance purchased through the health insurance marketplace. The form enables taxpayers to reconcile the advance premium tax credit amounts with the actual credit they qualify for, based on their household income and the details provided in Form 1095-A. 

For more detailed explanations and answers to common questions about tax forms, visit our IRS Form Help Center.

When You’d Use IRS Form 8962 (2019)

1. Claim the Premium Tax Credit: Taxpayers must file the form to claim the premium tax credit as a refundable credit on their federal income tax return if they purchased health insurance through the health insurance marketplace.
   
   
2. Reconcile Advance Premium Tax Credit Payments: Taxpayers use this form to reconcile advance payments with the actual credit they are entitled to based on their annual income, ensuring the correct amount is calculated under income tax regulations.
   
   
3. Marketplace Coverage for a Dependent: Individuals must file the form when someone in their tax family received marketplace coverage with advance payments, even if the taxpayer did not enroll personally, because the credit must be reconciled by the person filing the federal income tax return.
   
   
4. Amended or Late Filing Requirements: Taxpayers use the form when submitting an amended return or a late return to ensure proper reporting of premium assistance, expected income, and advance payment amounts related to their selected health coverage.

Key Rules or Details for the 2019 Tax Year

IRS Form 8962 (2019) relies on specific eligibility criteria and income standards; the points below outline the rules that determine whether a taxpayer qualifies for the premium tax credit.

1. Household Income Range Requirements: Taxpayers qualify for the premium tax credit when their household income falls between 100% and 400% of the federal poverty line, which is based on federal poverty guidelines and their family size for the tax year.
   
   
2. Marketplace Enrollment Requirements: Taxpayers qualify only when at least one person in the tax family purchased a qualified health plan through the health insurance marketplace, because coverage obtained outside the exchange does not meet premium tax credit eligibility requirements.
   
   
3. Minimum Essential Coverage Standards: Taxpayers cannot claim the credit if they were eligible for an employer-sponsored plan or other minimum essential coverage, as eligibility for this type of health coverage renders them ineligible for the premium tax credit under applicable percentages and affordability rules.
   
   
4. Filing Status and Joint Return Rules: Married taxpayers generally must file a joint return to qualify for the premium tax credit, as married filing separately is allowed only in specific exceptions, such as domestic abuse or spousal abandonment.

If you need guidance with an amended or late filing, our unfiled federal income tax return resource can help you take the right steps.

Step-by-Step (High Level)

1. Gather Marketplace and Income Records: Taxpayers begin by collecting Form 1095-A, income statements, and estimated income information to confirm actual credit eligibility and verify all necessary data for accurate reporting.
   
   
2. Calculate Modified Adjusted Gross Income: Taxpayers calculate their modified adjusted gross income by including annual income and expected revenue for all applicable household members, as this figure determines income eligibility and the appropriate percentage used for contribution calculations.
   
   
3. Determine Monthly Contribution Amount: Taxpayers apply the federal poverty guidelines to identify the maximum percentage of their income that they are expected to contribute, which enables them to determine household premium contributions and compare these amounts with the benchmark plan.
   
   
4. Compute the Premium Tax Credit: Taxpayers calculate the premium tax credit by comparing the monthly premium of their selected health coverage with the cost of the benchmark silver plan, which establishes the refundable credit amount they may claim.
   
   
5. Reconcile Advance and Actual Credit: Taxpayers reconcile advance payment amounts with the actual credit by reviewing advance payments made throughout the year, which determines whether they qualify for a tax refund or must repay part of the credit.

Common Mistakes and How to Avoid Them

Several errors frequently occur when completing IRS Form 8962 (2019); the items below explain how taxpayers can avoid these mistakes.

• Mixing Annual and Monthly Marketplace Amounts: Taxpayers should use the correct monthly or annual amounts from Form 1095-A, as switching these values can create inaccurate calculations that affect the final premium tax credit.
  
  
• Incorrect Income Reporting: Taxpayers should include income only for dependents who are required to file a tax return, as adding unnecessary dependent income can inflate household income and affect eligibility.
  
  
• Using the Wrong Benchmark Plan Amount: Taxpayers should verify the correct second-lowest-cost silver plan amount for their location, as errors in this figure can lead to incorrect premium tax credit calculations.
  
  
• Married Filing Separately Without Exception: Taxpayers should confirm that they qualify for an exception before filing separately, because most married filing separately situations result in a zero credit.

If you owe additional tax after filing, you might want to review IRS payment plan options to make repayment more manageable.

What Happens After You File

After filing IRS Form 8962 (2019), the Internal Revenue Service compares the information on the form with the data reported by the health insurance marketplace to verify accuracy. The agency confirms whether the taxpayer is owed a tax refund or whether additional tax liability is required due to excess advance premium tax credit payments. If any discrepancies are found, the taxpayer may receive a notice requesting clarification or extra documentation. 

FAQs

What should I do if I haven't received Form 1095-A for my health insurance?

You should contact the health insurance marketplace promptly to request a copy of Form 1095-A, because IRS Form 8962 (2019) cannot be completed without the information reported by your marketplace issuer.

Can I claim the premium tax credit if my income was below 100 percent of the federal poverty line?

You may still qualify in limited situations when the marketplace estimated that your income would meet eligibility guidelines and advance payments were issued, or if you are a lawfully present immigrant who is ineligible for Medicaid due to immigration restrictions.

What happens if I received the advance premium tax credit but my income was higher than expected?

You may need to repay part or all of the advance premium tax credit when filing your federal income tax return, because the repayment calculation is based on your final household income for the tax year.

Can I claim the premium tax credit if I was offered employer coverage?

You cannot claim the credit if you were eligible for affordable employer coverage that met minimum value requirements, because eligibility for this type of plan makes you ineligible for the premium tax credit.

Do I need IRS Form 8962 (2019) if no advance payments were made during the year?

You need the form only if you choose to claim the premium tax credit as a refundable credit, because taxpayers who qualify may increase their refund by claiming the full credit at tax time.

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