Health Insurance (1095-A) can impact the $&*# out of your refund or balance due! Premium Tax Credit: Claiming the Credit and Reconciling Advance Credit Payments
How Advance Credit Payments Affect Your Refund
If the premium tax credit computed on your return is more than the advance credit payments made on your behalf during the year, the difference will increase your refund or lower the amount of tax you owe. This will be reported in the ‘Payments’ section of Form 1040.
If the advance credit payments are more than the amount of the premium tax credit you are allowed, called excess advance credit payments, you will add all – or a portion of – the excess advance credit payments to your tax liability by entering it in the ‘Tax and Credits’ section of your tax return. This will result in either a smaller refund or a larger balance due.
Repaying Excess Advance Credit Payments
The amount of your excess advance credit payments that that increases your tax liability may be limited if your household income is less than 400 percent of the applicable federal poverty line. On the other hand, if your household income is 400 percent or more of the applicable federal poverty line, you will have to repay all of the excess advance credit payments.
See the Instructions for Form 8962, Premium Tax Credit, for information about repayment limitations.
If your filing status is Married Filing Separately, the repayment limitation above applies to both spouses separately based on the household income reported on each return.
The Marketplace will send you a Health Insurance Marketplace statement, Form 1095-A, by January 31 of the year following the year of coverage. This form shows the amount of the premiums for your and your family’s health care plans. This form also includes other information – such as advance credit payments made on your behalf – that you will need to compute your premium tax credit. For more information about Form 1095-A see Health Insurance Marketplace Statements.
If you also receive Form 1095-B or 1095-C, which are unrelated to the Marketplace, see our questions and answers for information about how these forms affect your tax return.
Remember to consider e-filing your tax return, because using tax preparation software is the best way to file a complete and accurate tax return.