Affordable Care Act Tax Credit

[Malum Prohibitum]

2019, healthcare exchange plan with a generous premium tax credit.  My income shot up over the summer, and I grew concerned that I was not going to stay under the 400% Oof family poverty level, so I changed it, stopped taking the tax credit in advance, and paid the entire unsubsidized premium for the last 5 months of 2019.  My income leveled off, and I stuck a bunch of money in my 401(k) to get under the 400% of family poverty level by the end of the year and save myself from the "cliff."

My understanding is that I get the tax credit whether it is paid in advance or trued up at tax time.

So now it is tax time.  My accountant sends me my tax forms for review.  I review the Form 8962, which shows the Premium Tax Credit, and on it one calculates the Net Premium Tax Credit (line 26, good news) or the Excess Advance Payment of Premium Tax Credit (line 27, bad news).

My form shows $833 on line 27, bad news.

So I start reviewing the form carefully.   Lines 12-23 are the twelve months of the year and have columns.  Column (d) is the "monthly maximum premium assistance," which shows $1760 for the first seven months of the year but is blank for the final five months.  Blank!

So the total premium tax credit on line 24 is 7 x 1760 = 12,320 instead of $21,120.

I have written my accountant, but I have not heard back.

Am I missing something????

Some more helpful information -

The form 1095-A sent out by the government shows 0.00 for the last five months of the year in columns B and C (SLCSP and Monthly Advance Payment of Premium Tax Credit).

I think I am still entitled to a tax credit of another $8800 (1760 x 5) over what my accountant shows.

Please share your thoughts and expertise.

[secondcor521]

Your accountant likely just entered the data from your 1095-A into Form 8962.  Your accountant is probably wrong in doing so.

As long as you continued to qualify for the credit (didn't file MFS, had an ACA policy, paid the premiums, etc.), then you should be entitled to the PTC for the last five months even though you did not receive the APTC (the advance of the tax credit).

You can contact the state exchange which issued your 1095-A, explain the problem to them, and ask them to issue you a revised 1095-A with the appropriate entries for the last five months of the year.  In particular, you need the SLCSP for the last five months of the year on your 1095-A.

Alternatively, your state may have a calculator or spreadsheet where you can put in your zipcode and find out what your SLCSP should have been for the last five months of the year and give that information to your accountant and have them put it on your 8962.

(It is rather likely that the SLCSP for the last five months will be the same number as it was for the first seven months, but that's not 100% guaranteed.)

Note that how your 8962 turns out will depend on how your actual income, estimated income, first seven months APTC all balance out.  Sounds like you know that though.

[geekette]

You said your income shot up - what is line 5  on 8962?  The closer it gets to 400%, the less PTC you are due for the entire year, as I understand it.

Since you took a large PTC for 7 months, it may have been more than you were due for the whole year based on your higher than expected yearly income.

[Northwoods]

We received PTC not in advance but with the true up when we filed our taxes.  Our 1095-A column b was blank for the entire year, and used the link below to get the figures I needed. This was our first year qualifying for the PTC so there was a learning curve but the amazing people either on MMM or the bogleheads (can’t remember which) pointed  me in the right direction.

https://www.healthcare.gov/tax-tool/#/premium-tax-credit

[secondcor521]

Since you took a large PTC for 7 months, it may have been more than you were due for the whole year based on your higher than expected yearly income.

Yes, that may be true.  However, there still should be entries in the last five rows (rows 19 through 23) which should make the OP's Form 8962 situation better than it is now.  Again, assuming OP was eligible for the credit for the last 5 months of the year, which they probably were.

[Malum Prohibitum]

You said your income shot up - what is line 5  on 8962? 

345%  Like I said, my income leveled off, and when I realized I might be under 400%, I jacked up my 401(k) contributions (I am self employed, so I have employee and employer match to play with) to make sure I was well under 400% with some room to spare in case I had miscalculated.  I came well under.  Line 5 is 345%

The closer it gets to 400%, the less PTC you are due for the entire year, as I understand it.

Since you took a large PTC for 7 months, it may have been more than you were due for the whole year based on your higher than expected yearly income.

  Everything you say is true, but I have (tried) to work through the numbers several times now. 

My monthly contribution is $835 (10,020 annually), based on my income and the decimal multiplier from chart 2 multiplied by my income . . .

Government paid a tax credit of 1879, when I was entitled to only 1760, so it overpaid $833 based on ONLY the first seven months.  My form 8962 shows I owe $833.  I think this is wrong.

Subtracting $835 (different from $833, 835 is my monthly contribution amount) from the cost of the monthly premium is $1760.  I am entitled to that tax credit monthly for all 12 months. $21,120.  My 8962 shows me entitled to the 1760 for only seven months.

So, yes, the government did overpay the first seven months of tax credits, but only by a total of $833.

[Malum Prohibitum]

We received PTC not in advance but with the true up when we filed our taxes.  Our 1095-A column b was blank for the entire year, and used the link below to get the figures I needed. This was our first year qualifying for the PTC so there was a learning curve but the amazing people either on MMM or the bogleheads (can’t remember which) pointed  me in the right direction.

https://www.healthcare.gov/tax-tool/#/premium-tax-credit

Northwoods,

I also thought it trues up at the when filing taxes.  Thank you for the link.   I will read that next.

[Malum Prohibitum]

Your accountant likely just entered the data from your 1095-A into Form 8962.  Your accountant is probably wrong in doing so.

. This is the conclusion I am coming to as well (and it was my first suspicion).

You can contact the state exchange which issued your 1095-A, explain the problem to them, and ask them to issue you a revised 1095-A with the appropriate entries for the last five months of the year.  In particular, you need the SLCSP for the last five months of the year on your 1095-A.

. Ugh.  I hate dealing with the exchange people - but this means thousands of dollars, so . . .

My state is Georgia - I think the exchange is just federal for us.

[Malum Prohibitum]

We received PTC not in advance but with the true up when we filed our taxes.  Our 1095-A column b was blank for the entire year, and used the link below to get the figures I needed. This was our first year qualifying for the PTC so there was a learning curve but the amazing people either on MMM or the bogleheads (can’t remember which) pointed  me in the right direction.

https://www.healthcare.gov/tax-tool/#/premium-tax-credit

Northwoods,

I just wanted to say thank you again.  You knocked it out of the park.  I generated the spreadsheet from that link and sent it to my accountant with line by line instructions on what to enter on the 8962, which works out to a credit of $7307 v. an overpayment showing now of $833.

Talk about a massive change to my tax situation!

My wife has been bugging me to fire the accountant and self perform the income taxes for years.  I think this year I am finally giving in. 


PS - that link also appears in the instructions for Form 8962, but I missed that until you provided it, and I just happened to notice that it was in the instructions - Hey!  That's the link Northwoods gave me!  LOL!

Many thanks.

[Malum Prohibitum]

I sent the accountant the spreadsheet that the healthcare exchange generated (using the link Northwoods provided).  My accountant has apologized and redid the return.

This means an extra $7000.

[Northwoods]

Glad I could help Malum Prohibitum!