IRS Form 8962 (2023): Premium Tax Credit Guide

What IRS Form 8962 (2023) Is For

IRS Form 8962 (2023) is used to calculate and reconcile the premium tax credit for individuals and families who enrolled in marketplace coverage through the Health Insurance Marketplace. This form compares any advance payments made toward your health insurance premiums with the final credit you qualify for on your federal income tax return. Its purpose is to determine whether you receive additional credit or must repay excess advance amounts; the calculation is based on your household income, reported premiums, and the information listed on Form 1095-A.

For a step-by-step overview of IRS forms and Marketplace requirements, check out our IRS Form Help Center.

When You’d Use Form 8962

You must file IRS Form 8962 (2023) with your income tax return when certain situations apply. 

1. Advance Payments Were Made: You must file Form 8962 when advance premium tax credit payments were sent to your health insurance provider during the year because the IRS requires you to reconcile these amounts against the credit you qualify for.
   
   
2. You Want to Claim the Premium Tax Credit: You must complete the form when you qualify for the tax credit and want to apply it toward your refund or lower the taxes you owe on your federal income tax return.
   
   
3. A Family Member Was Enrolled in Marketplace Insurance: You must file Form 8962 when someone in your household was enrolled in marketplace coverage and premium amounts were reported on Form 1095-A.
   
   
4. You Received a Corrected Form 1095-A: You must file or amend your income tax return when the Marketplace issues a corrected form that updates monthly premiums, SLCSP premium figures, or other required details.
   
   
5. Allocation Situations Apply: You must complete the form when premium amounts need to be allocated between tax households due to shared marketplace enrollment, such as in cases of divorce or multi-family policies.

For more detailed instructions and resources on premium tax credits, visit our IRS Form Help Center.

Key Rules or Details for IRS Form 8962 (2023)

Several vital rules apply when using IRS Form 8962 (2023) to determine your eligibility and credit amount. 

1. Income Thresholds Apply: Your household income must fall within eligible limits based on the federal poverty line because these figures help determine the portion of premiums you are expected to pay.
   
   
2. Employer Coverage Affects Eligibility: You cannot claim a premium tax credit for any month in which you had an offer of affordable employer health coverage that met the minimum value standard because eligibility rules prevent duplicate assistance.
   
   
3. Family Size Determines Key Figures: Your household size directly affects poverty line comparisons, contribution amounts, and credit calculations because the form relies on this information to produce accurate figures.
   
   
4. You Must Reconcile Advance Payments: You must compare your final credit to the advance payments made on your behalf because Form 8962 requires you to repay any excess amounts if the advance was higher than the calculated credit.
   
   
5. Corrected Marketplace Forms Apply: You must use the updated SLCSP premium information from any corrected Form 1095-A because the IRS requires accurate premium amounts when calculating the credit.

Step-by-Step (High Level) for IRS Form 8962 (2023)

These steps outline how to complete IRS Form 8962 (2023) using the information provided by the Health Insurance Marketplace.

1. Gather Required Marketplace Forms: You must obtain Form 1095-A and verify that every monthly premium amount and SLCSP premium listed matches your marketplace records to ensure the accuracy of your calculations.
   
   
2. Calculate Household Income: You must enter your modified adjusted gross income and the income of any dependent required to file because the form uses this combined figure to determine your applicable contribution amount.
   
   
3. Compare Premiums and Contribution Amount: You must use the annual or monthly calculation method to compare your marketplace health plan premiums to the second-lowest-cost silver plan because your selected method must match the way your coverage changed during the year.
   
   
4. Determine Your Premium Tax Credit: You must calculate your final credit based on allowable amounts and then compare it to any advance payments so the IRS can determine whether you receive a credit or owe repayment.
   
   
5. Finalize Entries on Your Income Tax Return: You must transfer your final premium credit or repayment amount to the correct lines on your federal income tax return because these entries affect your refund or the taxes you must pay.

If you owe additional tax after reconciliation, IRS payment plan options can help you manage payments conveniently.

Common Mistakes and How to Avoid Them

These errors often delay IRS processing for IRS Form 8962 (2023).

1. Rounding Errors: You should report whole dollar amounts only because entering unrounded figures or missing decimals may cause the IRS system to misread your premium or SLCSP amounts.
   
   
2. Using Annual Totals in Monthly Fields: You should use annual totals only for annual calculations because entering those figures in monthly fields results in incorrect values that significantly inflate your credit or repayment.
   
   
3. Incorrect Dependent Income Entries: You should only report dependent income when a dependent is required to file a tax return because unnecessary entries artificially increase household income and produce inaccurate results.
   
   
4. Incorrect Filing Status: You must choose the correct filing status because married filing separately generally disqualifies you from receiving a credit unless a specific exception applies.
   
   
5. Failure to Transfer Final Amounts: You must carry the final credit or repayment amount to the correct lines on your federal income tax return because missing entries cause delays and lead to incorrect tax calculations.

What Happens After You File IRS Form 8962 (2023)

Once you file IRS Form 8962 (2023), the IRS reviews your reported premiums, income, and advance payment amounts to determine whether you receive an additional premium tax credit or must pay back excess advance payments. The IRS may issue notices if information is missing or does not match the records of the marketplace. If this occurs, you must respond with updated forms or documentation as requested. 

FAQs

Do I need Form 8962 if I did not receive advance payments?

You must file the form if you want to claim the premium tax credit on your tax return, even when no advance payments were made during the year.

What if I lost my Form 1095-A from the Marketplace?

You must contact the Health Insurance Marketplace to request a new copy because the IRS cannot provide this form, and you cannot complete Form 8962 accurately without it.

Can I claim the credit if I had employer coverage available?

You cannot claim the premium tax credit for months when you had an offer of affordable employer coverage because eligibility rules prevent overlapping financial assistance.

What if I received a corrected Form 1095-A after filing?

You must file an amended income tax return if the Marketplace issues a corrected form because the updated premium amounts and SLCSP figures must match your final calculations.

Can I file my tax return without reconciling advance payments?

You must reconcile advance payments on Form 8962 because failing to do so can delay your refund and affect your future eligibility for marketplace assistance.