Affordable Care Act - What to expect when filing your tax return

The American Rescue Plan Act of 2021 (ARPA), enacted on March 11, 2021, suspended the requirement to repay excess advance payments of the premium tax credit (excess APTC) for tax year 2020.

If you already filed a 2020 return and reported excess APTC or made an excess APTC repayment, you don't need to file an amended return or take any other action. The IRS will reduce the excess APTC repayment amount to zero with no further action needed by the taxpayer. The IRS will reimburse people who have already repaid any excess APTC on their 2020 tax return. Taxpayers who received a letter about a missing Form 8962 should disregard the letter if they have excess APTC for 2020. The IRS will process tax returns without Form 8962 for tax year 2020 by reducing the excess APTC amount to zero.

If you have not filed your 2020 tax return, here's what to do:

• If you have excess APTC for 2020, you are not required to report the excess APTC on your 2020 tax return or file Form 8962, Premium Tax Credit (PTC).
• If you're claiming a net premium tax credit for 2020, you must file Form 8962, Premium Tax Credit (PTC).

For details see the Tax Year 2020 Premium Tax Credit:

• Frequently Asked Questions
• Fact Sheet
• News Release

Individuals who purchase coverage through the Health Insurance Marketplace may be eligible for advance payments of the premium tax credit (APTC). The Marketplace uses information individuals provide about their projected income, address, and family composition for the year to estimate the amount of APTC. Individuals can forgo APTC or have all or some of the APTC for which they are eligible paid directly to their insurer to lower their monthly premiums. For tax years 2021 and 2022, the ARPA temporarily expanded eligibility for the premium tax credit by eliminating the rule that a taxpayer is not allowed a premium tax credit if his or her household income is above 400% of the federal poverty line.

For tax years other than 2020, individuals who chose to have APTC sent to their insurer must file a federal income tax return, even if otherwise not required to file, and complete Form 8962, Premium Tax Credit (PTC)PDF PDF to claim the premium tax credit and reconcile the APTC with the premium tax credit allowed. If the taxpayer’s APTC is less than the premium tax credit, the taxpayer will get the difference, called net premium tax credit, as a higher refund or lower tax due. If the APTC paid to their health care providers were more than the premium tax credit (excess APTC), the taxpayer must pay all or part of the excess APTC with their tax return, except that this requirement to repay excess APTC does not apply for tax year 2020. The completed Form 8962 must be filed with the federal income tax return, except for taxpayers with excess APTC for 2020 who are not required to file Form 8962. For years other than 2020, filing your return without Form 8962 will delay your refund and may affect future APTC.

Those who enrolled in coverage through the Marketplace but didn’t get the benefit of APTC may claim the premium tax credit when they file their return. Individuals can complete Form 8962 to find out if they are allowed the premium tax credit. For more information about the premium tax credit, see our Premium Tax Credit page or use the interactive tool, Am I eligible to claim the Premium Tax Credit?

Individuals who purchased coverage through the Health Insurance Marketplace should receive Form 1095-A, Health Insurance Marketplace Statement. This form provides information that is needed when completing Form 8962. Taxpayers with questions about the information on Form 1095-A, or about receiving Form 1095-A, should contact their Marketplace directly. 

Some taxpayers may receive a corrected or voided Form 1095-A because the information on the initial form was incorrect or incomplete. For more information on what you need to do with a corrected or voided Form 1095-A, see Corrected, Incorrect or Voided Forms 1095-A. This information can help you assess whether you should file an amended tax return.

Under ARPA, eligible taxpayers are allowed to exclude up to $10,200 of unemployment compensation received in 2020 on their 2020 Form 1040, 1040-SR, or 1040-NR. Beginning in July 2021, the IRS reviewed tax returns filed prior to the enactment of ARPA to identify tax returns on which both excludible unemployment compensation and excess APTC repayments were reported by the taxpayer. Taxpayers received letters from the IRS, generally within 30 days of the adjustment, informing them of what kind of adjustment was made (such as refund, payment of IRS debt payment or payment offset for other authorized debts) and the amount of the adjustment.  For taxpayers who reported both excludible unemployment income and APTC, the adjustment should have covered both items even though the IRS’s communication to the taxpayer may have mentioned only unemployment compensation.

However, if, because of the excluded unemployment compensation, taxpayers are now eligible for deductions or credits not claimed on the original return, they should file a Form 1040-X, Amended U.S. Individual Income Tax Return for tax year 2020. See 2020 Unemployment Compensation Exclusion FAQs — Topic D: Amended Return (Form 1040-X) for more information.

Under ARPA, if you, or your spouse (if filing a joint return), received, or were approved to receive, unemployment compensation for any week beginning during 2021, the amount of the taxpayer's household income is considered to be no greater than 133% of the federal poverty line for the taxpayer's family size and the taxpayer is considered to have met the household income requirements for being allowed a premium tax credit.  

Check the box on line A, above Part I of 2021 Form 8962, if you, or your spouse (if filing a joint return), received, or were approved to receive, unemployment compensation for any week beginning during 2021. By checking this box, you are certifying that you, or your spouse (if filing a joint return), received, or were approved to receive, unemployment compensation for any week beginning during 2021. For more information, see Pub. 974.  Keep any supporting documentation related to the receipt of or approval to receive unemployment compensation with your tax return records.