Married and Confused: Understanding the Impact on Advanced Premium Tax Credits

Marrying someone with a significantly higher income can raise questions about your health insurance coverage and eligibility for the Advanced Premium Tax Credit (APTC). Understanding the rules can help you avoid unexpected surprises and ensure you receive the financial assistance you need.

Impact of Marriage on APTC

When you file your federal income taxes, you report your income and tax information jointly with your spouse. This means that your spouse’s income will be considered when determining your eligibility for the APTC. However, the IRS recognizes that income circumstances can change during the year, particularly in the case of marriage.

Alternative Calculation for Year of Marriage

The IRS provides an “alternative calculation” for individuals who get married during the tax year. This calculation allows you to use your income up until the date of marriage to determine your eligibility for the APTC.

How It Works

The alternative calculation is done on Part V of Form 8962. Here’s what it involves:

– Income before marriage: Calculate your income for the period before you got married.
– Income after marriage: Calculate your income for the period after you got married.
– Spouse’s income: Determine your spouse’s income for the entire year.
– Combined income: Add your income before marriage to your spouse’s income for the full year.
– Monthly income: Divide your combined income by 12 to get your average monthly income.

Example Scenario

Let’s say you earned $30,000 before marrying someone who earned $115,000. Your spouse’s income increased to $130,000 after you got married.

– Income before marriage: $30,000
– Income after marriage: $0
– Spouse’s income: $115,000 before marriage + $15,000 after marriage $130,000
– Combined income: $30,000 + $130,000 $160,000
– Monthly income: $160,000 / 12 $13,333

Based on this calculation, your average monthly income would be $13,333. This income would be used to determine your eligibility and APTC amount for the entire year.

Seek Professional Help

While the alternative calculation can provide some relief, it’s important to seek professional guidance from a licensed agent to ensure accuracy and avoid potential complications. A knowledgeable agent can review your specific situation, complete the calculations, and estimate the amount you may need to repay.