If you received health insurance through the Health Insurance Marketplace, you may need to file Form 8962 with your tax return. This form determines whether you qualify for the Premium Tax Credit (PTC) or if you need to repay any excess premium subsidies received during the year.
In this guide, we’ll walk you through the step-by-step process of completing Form 8962, ensuring you comply with tax regulations and maximize your potential credit.
Table of Contents
What Is Form 8962?
Form 8962, officially called the Premium Tax Credit (PTC) form, is required for individuals who:
- Enrolled in a Marketplace health plan and received Advance Premium Tax Credit (APTC) payments.
- Want to claim the Premium Tax Credit when filing their taxes.
This form helps reconcile the advance payments received with the actual amount of credit you qualify for based on your final income for the year.
Important: If you received Form 1095-A from the Marketplace, you must use it to fill out Form 8962.
Step-by-Step Instructions for Completing Form 8962
Step 1: Gather Your Documents
Before filling out Form 8962, ensure you have the following:
- Form 1095-A (Health Insurance Marketplace Statement)
- Your tax return information (income, deductions, and filing status)
- Proof of income (W-2s, 1099s, self-employment records)
Step 2: Fill Out Basic Information
At the top of Form 8962, enter:
- Your name (as it appears on your tax return)
- Your Social Security Number (SSN)
Step 3: Calculate Household Income (Lines 1-3)
- Line 1: Enter your modified adjusted gross income (MAGI) from your tax return.
- Line 2: If filing jointly, add your spouse’s MAGI.
- Line 3: Household income is the sum of Line 1 and Line 2.
Your MAGI includes wages, self-employment income, and tax-exempt interest.
Step 4: Determine Your Household Income Percentage (Lines 4-5)
- Line 4: Find the federal poverty level (FPL) based on your household size.
- Line 5: Divide your household income by the FPL to determine your income percentage.
Step 5: Compute the Applicable Percentage (Lines 6-7)
- Line 6: Refer to IRS tables to determine your applicable percentage range based on Line 5.
- Line 7: Enter the final applicable percentage.
This percentage is used to calculate the maximum premium you should have paid for your Marketplace health insurance.
Step 6: Calculate Your Premium Tax Credit (Lines 8-11)
- Line 8: Enter the annual premium amount from Form 1095-A.
- Line 9: Enter the second-lowest cost Silver Plan (SLCSP) premium from Form 1095-A.
- Line 10: Multiply household income by the applicable percentage to find the maximum amount you should pay for health insurance.
- Line 11: Subtract Line 10 from Line 9 to find your Premium Tax Credit (PTC) amount.
Step 7: Reconcile Advance Premium Tax Credit (Lines 12-26)
- Line 12: Enter the total Advance Premium Tax Credit (APTC) received from Form 1095-A.
- Lines 13-23: If your APTC was too high or too low, use these lines to calculate whether you owe additional tax or qualify for more credit.
- Line 26: This is your final Premium Tax Credit adjustment.
If you received too much APTC, you may have to repay part or all of it when filing your return.
Step 8: Determine the Repayment Amount (Lines 27-29)
If you owe money back to the IRS, this section calculates how much you need to repay.
- Line 27: Enter any repayment limitations.
- Line 28: Final repayment amount.
- Line 29: If the APTC was too high, this is the amount you owe in additional tax.
If your income is low, you may qualify for repayment limitations.
Common Mistakes to Avoid When Filing Form 8962
- Forgetting Form 1095-A: This form is essential as it contains the insurance details needed for Form 8962.
- Using incorrect income information: Ensure your MAGI is correctly calculated using all sources of income.
- Misreporting household size: Your premium tax credit is based on the number of dependents.
- Not reconciling APTC: If you received an advance credit, you must file Form 8962, even if you don’t typically owe taxes.
When to File Form 8962
- Form 8962 must be filed along with your annual tax return (Form 1040).
- The deadline for filing your tax return is April 15, 2025 (unless you file for an extension).
- If you received APTC, you must file Form 8962 to avoid issues with future Marketplace coverage.
Do You Need Help Filing Form 8962?
Filing taxes can be complicated, especially when reconciling premium tax credits. Working with a tax professional can help you maximize your credits, avoid penalties, and ensure compliance with IRS regulations.
Tax services and bookkeeping professionals can assist with:
- Premium Tax Credit Calculations
- Income verification
- IRS compliance
- Filing assistance
Final Thoughts
Filing Form 8962 is essential for anyone who received Marketplace health insurance and advance tax credits. Understanding how to calculate your Premium Tax Credit, reconcile advance payments, and avoid errors can help you save money and stay compliant with IRS rules.
If you’re unsure about filing or need assistance, consulting with tax professionals can simplify the process and ensure you get the best tax outcome possible.
