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The Premium Tax Credit helps make your health insurance premiums more affordable. You’ll receive it as an advance credit or claim it as a refundable credit on your return. So, even if you owe little or no tax, you can still benefit from the credit.
To find out if you can claim Premium Tax Credit, you’ll need to look at your household income. If you do qualify, your household income will also determine the amount of credit you can claim.
Qualifying for the Premium Tax Credit
To qualify:
You must buy your health insurance from the federal or a state Marketplace.
You must file a joint return with your spouse if you’re married. There are exceptions to this if you’re considered unmarried for head of household filing status or if you’re a victim of domestic abuse or spousal abandonment.
You can’t be claimed as a dependent by anyone else
Your household income must fall below 400% of the federal poverty level for your family size. Your income must also be above the range for Medicaid eligibility (or above 100% of the FPL in states that didn’t expand Medicaid for adults). However, for tax years 2021 through 2025, you can still qualify with a household income of 400% and higher.
Here’s the 100% level that applies for 2023 in the 48 contiguous states:
- Family of one — $13,590
- Family of two — $18,310
- Family of four — $27,750
The poverty levels for Alaska and Hawaii are slightly higher.
Alaska:
- Family of one — $16,990
- Family of two — $22,890
- Family of four — $34,690
Hawaii:
- Family of one — $15,630
- Family of two — $21,060
- Family of four — $31,920
If you’re not sure if you qualify for this Premium Tax Credit, visit www.healthcare.gov. You’ll be able to shop around for different plans and get an estimate of your Premium Tax Credit.
Advance Premium Tax Credit
This advance tax credit is based on your estimated household income you provided when you signed up for marketplace insurance. It’s paid directly to your insurance provider every month and helps with the premium you pay out of pocket.
When you prepare your taxes, we’ll reconcile the advance paid to your insurance company. We’ll figure this with the amount of the Premium Tax Credit you’re eligible for based on your actual household income.
So, if your actual Premium Tax Credit was less than your advance, we’ll do one of these:
- Subtract the difference from your refund
- Add the difference to your balance due. Keep in mind that the difference is subject to certain caps.
However, for your 2020 taxes, you won’t need to repay any excess advance. This change is temporary, and only applies to your 2020 taxes.
If your Premium Tax Credit is more than your advance, we’ll either:
- Add the difference to your refund
- Subtract the difference from your balance due
The easiest way to minimize having to pay back the Premium Tax Credit is to update the marketplace when you have any life changes. Life changes can influence your estimated household income and your credit amount. So, the sooner you can update the marketplace, the better. This ensures you receive as close to the correct amount as possible. A life change includes:
- A marriage or divorce
- Having a baby, adopting a child, or placing a child for adoption or foster care
- A child on your policy turning 26 or a dependent changing status so they’re no longer your dependent
- The death of anyone in your household
- Changes to income
- An offer of job-based insurance coverage to anyone in your household, even if they don’t enroll in it
- Someone in your household getting coverage from a public program, like Medicaid, Children’s Health Insurance Program (CHIP), or Medicare
- A change to your permanent home address
If you receive the Advance Premium Tax Credit, you’ll need to file a return for the year, even if you don’t meet the income threshold to file otherwise.
Premium Tax Credit filing: Avoiding a rejected return
Be sure to attach Form 8962 to your return, if you, your spouse, or your dependent had ACA Marketplace coverage at some point in the year and received the Advance Premium Tax Credit. Attaching the form can help you avoid your return being rejected when you e-file (shown as Reject Code F8962-070).
To help you complete Form 8962, the health insurance exchange will send you Form 1095-A. Can’t find your Form 1095-A? You can get a copy from www.healthcare.gov or your state’s exchange portal if you received coverage from a state exchange.
If you don’t believe you had Marketplace insurance, you can attach a statement to your e-filed return stating that you did not have Marketplace coverage.
Get help claiming the Premium Tax Credit
Need help claiming this tax benefit? Whether you choose to file online or want to file your taxes with a tax professional, we’re here for you.
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