n April 9, 2021, the IRS issued IR-2021-84. In this issue, guidance is given to taxpayers who have excess advance payments of the Premium Tax Credit (“APTC”) for tax year 2020. The American Rescue Plan Act of 2021 suspends the requirement to increase tax liabilities for tax year 2020 by all or a portion of excess advance payments.
The Premium Tax Credit (“PTC”) helps pay for Healthcare Marketplace insurance coverage. PTC is estimated by the Marketplace when taxpayers apply for coverage. An estimated credit amount is based on projected income and family-size information provided on the application. Eligible taxpaying participants choose to have some, all, or none of the credit applied to premiums, which lowers the amount of monthly premium expense.
Should the taxpayer choose not to get APTC, a Form 8962 is used to figure the amount of their PTC. Reasons for not choosing the APTC benefits vary. Larger refunds, taxes being lowered, or uncertainty of income are reasons that some taxpayers may choose this option. Disregard a letter about missing Form 8962 if you have already filed a 2020 tax return and have excess 2020 APTC. Do not file an amendment or contact the IRS. The IRS will process returns without the form and is taking steps to reimburse taxpayers that are due a refund.
It is recommended that taxpayers check with a tax professional or use tax software to calculate the allowable PTC in order to reconcile it with their APTC. Form 1095-A, Health Insurance Marketplace Statement, will provide needed amounts.
If claiming a new PTC for tax year 2020, you are required to file Form 8962. It is recommended that taxpayers check with a tax professional or use tax software to calculate the allowable PTC in order to reconcile it with their APTC. Form 1095-A, Health Insurance Marketplace Statement, will provide needed amounts.
Disregard a letter from the IRS about missing Form 8962 if you have already filed a 2020 tax return and have excess 2020 APTC. Do not file an amendment. The IRS will process returns without the form and is taking steps to reimburse taxpayers that are due a refund.
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