Taxpayers must reconcile marketplace advance payments and file Form 8962

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IRS Tax Tip 2020-21, February 19, 2020

Failing to file Form 8962, Premium Tax Credit, to reconcile 2019 advance payments of the premium tax credit may affect return processing, and delay the taxpayer's refund. It may also affect their ability to get advance payments of the premium tax credit or cost-sharing reductions. Taxpayers who don't file and reconcile their 2019 advance credit payments may not be eligible for advance payments of the premium tax credit in the future.

What is the premium tax credit?

The premium tax credit helps pay for health insurance coverage bought from the Health Insurance Marketplace. When the taxpayer or their family member applies for coverage, the marketplace estimates the amount of the premium tax credit they may be able to claim. This estimate is based on information the taxpayer provides about family size and projected household income. The taxpayer can then decide if they want to have all, some, or none of the credit paid directly to their insurance company. This option will lower their monthly payments.

Who is required to file Form 8962 to reconcile advance payments?

Taxpayers who have advance credit payments made on their behalf, are required to file Form 8962 with their income tax return. This will reconcile the amount of advance payments with the premium tax credit they may claim based on their actual household income and family size.

How do taxpayers know they received advance credit payments?

Taxpayers or members of their family who enrolled in health insurance coverage for 2019 through the marketplace should receive Form 1095-A, Health Insurance Marketplace Statement. This form shows the months of coverage and any APTC paid to the taxpayer's insurance company.

This form also provides information to complete Form 8962. Taxpayers who have questions about the information on Form 1095-A, or about receiving it, should contact their marketplace directly. The IRS can't answer questions about information on Form 1095-A or about missing or lost forms.

How does a taxpayer reconcile advance credit payments?

Filing electronically is the easiest way to file a complete and accurate tax return. Taxpayers who received advance credit payments must file a tax return to reconcile even if they otherwise don't have to file.

Taxpayers who earned $69,000 or less can use IRS Free File, featuring brand-name software that does all the hard work.

Taxpayers should figure their premium tax credit and compare it to the amount of APTC on Form 8962. Taxpayers must file Form 8962 with their tax return.

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