Repayment of Excess Advance Premium Tax Credit: What to Know
The Affordable Care Act (ACA) provides tax credits to help individuals and families afford health insurance. In some cases, individuals who receive these tax credits may have received more than they were entitled to. If this occurs, the excess amount must be repaid to the IRS.
Calculating Excess Premium Tax Credit
To determine if you received an excess premium tax credit, you need to complete Form 8962, Premium Tax Credit. This form will calculate the amount of tax credit you are eligible to receive based on your income and family size.
If the amount of tax credit you received is more than the amount you are eligible for, you will need to repay the excess amount. The repayment amount will be included on your tax return, along with instructions on how to make the payment.
Making the Repayment
You can make the repayment online, by mail, or by phone. To make the payment online, you will need to create an account on the IRS website. You can also make the payment by mail by sending a check or money order to the IRS address listed on your tax return. To make the payment by phone, you will need to call the IRS at 1-800-829-0922.
Important: It is critical to make the repayment by the deadline to avoid penalties and interest charges. The deadline for making the repayment is the same as the deadline for filing your tax return.
Avoiding Excess Premium Tax Credit Repayments
To avoid having to repay excess premium tax credit, it is important to:
Estimate your income accurately when applying for the tax credit.
Report all changes in income or family size to the Marketplace.
Reconcile your premium tax credit when you file your tax return.
If you have any questions about repaying excess premium tax credit, you should contact a licensed insurance agent or tax professional. Seeking professional guidance can ensure that you understand your obligations and avoid any potential penalties.
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