How to Avoid Repaying Too Much Premium Tax Credits Under the ACA

The Affordable Care Act (ACA) provides premium tax credits to help people afford health insurance. However, if you receive too much in tax credits, you may have to repay some of the money when you file your taxes.

One way to avoid repaying too much in tax credits is to have the correct amount of federal income tax withheld from your paycheck. If you have too little withheld, you may not receive enough in tax credits to cover your health insurance premiums. If you have too much withheld, you may receive more in tax credits than you need, which could result in having to repay some of the money.

How to Calculate the Correct Amount of Withholding

The correct amount of withholding depends on a number of factors, including your income, filing status, and number of dependents. You can use the IRS Withholding Calculator to determine how much federal income tax you should have withheld from your paycheck.

What to Do if You Need to Adjust Your Withholding

If you need to adjust your withholding, you can do so by completing a new Form W-4, Employee’s Withholding Allowance Certificate. You can get a Form W-4 from your employer or from the IRS website.

When completing the Form W-4, be sure to follow the instructions carefully. You will need to provide information about your income, filing status, and number of dependents. You can also use the IRS Withholding Calculator to help you complete the Form W-4.

Once you have completed the Form W-4, give it to your employer. Your employer will use the information on the Form W-4 to calculate how much federal income tax to withhold from your paycheck.

How to Avoid Repayment Under ACA

If you are receiving premium tax credits under the ACA, it is important to have the correct amount of federal income tax withheld from your paycheck. By following the steps outlined above, you can help ensure that you do not have to repay too much in tax credits when you file your taxes.

Seek Help from Licensed Agent

If you are unsure about how to calculate the correct amount of withholding or how to complete a Form W-4, you can seek help from a licensed agent. A licensed agent can help you determine how much federal income tax you should have withheld from your paycheck and can help you complete the Form W-4.