If you got too high a subsidy or too low, it gets reconciled at tax time on form 8962. Scroll down to get the form from the IRS website. If your subsidies were too high you may have to pay penalties, if too low, you can get a tax refund or lower the amount you have to pay. In a lot of ways, IMHO subsidies are hocus pocus, jiggery pokery – smoke and mirrors as it’s all guesswork and promises. Be sure to report income and household changes within 30 days.
ARPA Stimulus – you don’t have to pay back 2020 overage on subsidies IRS.Gov *
#Form8962 Premium Tax Credit
Reconciliation Form attaches to 1040
Subsidy is IMHO hocus pocus - smoke & mirrors
it all comes out when you file taxes!
- Our webpage on Form 8962 - Premium Tax Credit Subsidy Reconciliation
- Instructions 8962
- How to fill out 8962 VIDEO
- 8962 ONLINE CalculatorTaxFormCalculator.com
- VIDEO on Missing IRS 12 C or 8962
- 1095 & 3895 that you need to do 8962
Covered CA Video on tax forms
but first you need the Proof of Coverage Form 1095 A from Covered CA
and B if applicable – like if you had Covered CA part of the year and other coverage the rest of the year, from an Insurance Company, Government – Like Medicare or Medi-Cal or your Employer.
When you are done completing # 8962, enter the calculation on line 46 and/or 69 of 1040 form.
Schedule 1 Additional Income & Adjustments to Income
Do you think this process is complicated?
- Interactive Tax Assistant (ITA)
- Am I eligible to claim the Premium Tax Credit?
- IRS FAQ on Premium Tax Credit
- Learn More About Your Health Insurance Tax Documents | Covered California VIDEO
- turbo tax.com
- H & R Block
- E file.com
- Estimate the Subsidy for Health Insurance, benefits, premiums, etc.
- 8962 ONLINE Calculator
- Tax Form Calculator.com
- e tax.com
- Marriage Higher or Lower Taxes?
Why am I getting this letter?
The IRS sent you this letter because Covered CA notified them that they made advance payments of the premium tax credit – subsidy on your behalf to your or your family’s insurance company last year.
- You also received this letter because – when you filed your individual tax return – you didn’t reconcile the advance payments of the premium tax credit, using form Form 8962,
What do I need to do now?
- You must respond to the letter, even if you disagree with the information in it. If you disagree, send the IRS a letter explaining what you think is in error.
- If you received this letter, but didn’t enroll in health insurance through Covered CA, where you can have a broker at no additional charge, you must let the IRS know.
- The letter outlines the information you should provide in your response, which includes:
- A copy of the Form 1095-A, where Covered CA shows the subsidies you got for the year.
- A completed Form 8962
- The second page of your tax return, which includes the “Tax and Credits” and “Payments” sections, showing the necessary corrections and your signature. You must complete either the line for “excess advance premium tax credit repayment” or the line for “net premium tax credit.”
- If you originally filed a Form 1040EZ tax return, you must transfer the information from your Form 1040EZ to a Form 1040A and include it with your response to the 12C letter.
Is there anything else I need to know?
- If it’s Covered CA we can do that for you, when you appoint us as your agent – here’s instructions.
- If you need your Form 1095-A, you should contact Covered CA or you can have a broker at no additional charge directly.
- The IRS does not issue and cannot provide that information to you.
- Do not file a Form 1040X, Amended U.S. Individual Income Tax Return. Once you respond to the letter, the IRS uses the information you provide to process your tax return.
- You can mail or fax your response. Be sure to include a copy of the letter with your response. Use the mailing address and fax number in the letter to respond.
- For more information about the health care law and the premium tax credit, visit IRS.gov/aca for more information. Tax Tip 2016-43
Even More detail
Requesting information to reconcile Advance Payments of the Premium Tax Credit
We are sending you this letter because:
- Covered CA notified the IRS that they made advance payments of the premium tax credit to your or your family’s health insurance company to reduce your premium costs and
- you didn’t include the Form 8962, Premium Tax Credit, to reconcile the advance payments that were paid on your behalf when you filed your individual 2015 tax return.
When the Health Insurance Marketplace pays advance payments of the premium tax credit on your behalf, you must file Form 8962 to reconcile the advance payments to the actual amount of the Premium Tax Credit that you are eligible for based on your actual household income and family size. You must use the Form 1095-A, Health Insurance Marketplace Statement, sent to you from your Health Insurance Marketplace to complete Form 8962.
If you don’t reconcile:
If you don’t reconcile, you won’t be eligible for advance payments of the premium tax credit or cost-sharing reductions Enhanced Silver to help pay for your Covered CA health insurance coverage for the following calendar year.
What you need to do
- Read your letter carefully and respond timely.
- You must respond to the letter, even if you disagree with the information in the letter. If you disagree, send us a letter explaining what information you think is in error. If you didn’t purchase a health insurance policy from the Marketplace, you must let us know.
- Provide the information requested in the letter. This includes:
- a copy of your Form 1095A provided by your Marketplace,
- a completed Form 8962
- a copy of the corrected second page from your original return that shows the “Tax and Credits” and “Payments” sections. You must complete either the line for “excess advance premium tax credit repayment” (line 46, Form 1040, or line 29, Form 1040A) or the line for “net premium tax credit” (line 69, Form 1040, or line 45, Form 1040A).NOTE: If you originally filed a Form 1040EZ tax return, you must transfer the information from your Form 1040EZ to a Form 1040A and include it with your response. Form 1040EZ does not have the designated lines needed to carryforward amounts from a Form 8962.
- You should have received a Form 1095-A from your Marketplace. If you didn’t receive your Form 1095-A, log in to your HealthCare.gov or state Marketplace account or contact your agent or Covered CA directly. The IRS cannot answer questions about the information on your Form 1095-A, reissue missing/lost forms, or issue a corrected form.
- Do not file a Form 1040X, Amended U.S. Individual Income Tax Return. After we receive the requested information, we’ll use it to process your original tax return.
- If you’re entitled to a refund after reconciling your advance payments, we’ll send your refund about 6-8 weeks after we receive all of the necessary information.
How to respond
Your Letter 0012C provides a fax number, if you want to send the information by fax. If you prefer to mail your response, send the information to the address listed at the beginning of the letter. Also, include a copy of the letter with your response.
You may want to
Tax Return Deadline
H & R Block advises to file a return and reconcile your credit by April 18, or request an extension so you have more time to file your taxes. An extension will give you until October 17 to file your return and reconcile any credit you received through Covered CA
Will I have to file a federal income tax return to get the premium tax credit?
Yes. For any tax year, if you have APTC in any amount or you do not have APTC but you plan to claim the premium tax credit, you must file a Form 8962, and attach it to your federal income tax return for that year. If you have any APTC, you will use Form 8962 to reconcile the difference between the APTC made on your behalf and the actual amount of the credit that you may claim on your return. This filing requirement applies whether or not you would otherwise be required to file a return.
If APTC is made on behalf of you or an individual in your family, and you do not file a tax return, you will not be eligible for APTC or cost-sharing reductions to help pay for your Marketplace health insurance coverage in future years. This means that you will be responsible for the full cost of your monthly premiums. IRS.gov
CFR 155.305 (f) (4)
Compliance with filing requirement.
(i) Covered CA may not determine a tax filer eligible for advance payments of the premium tax credit if HHS notifies the Exchange as part of the process described in § 155.320(c)(3) that advance payments of the premium tax credit were made on behalf of the tax filer or either spouse if the tax filer is a married couple for a year for which tax data would be utilized for verification of household income and family size in accordance with § 155.320(c)(1)(i), and the tax filer or his or her spouse did not comply with the requirement to file an income tax return for that year as required by 26 U.S.C. 6011, 6012, and implementing regulations and reconcile the advance payments of the premium tax credit for that period.
(ii) Notwithstanding the requirement in paragraph (f)(4)(i) of this section, the Exchange may not deny eligibility for advance payments of the premium tax credit under paragraph (f)(4)(i) of this section unless direct notification is first sent to the tax filer, consistent with thestandards set forth in § 155.230, that his or her eligibility will be discontinued as a result of the tax filer‘s failure to comply with the requirement specified under paragraph (f)(4)(i) of this section.
#Report changes as they happen - within 30 days!
10 days for Medi Cal
Our webpage on ARPA & Unemployment Benefits - Silver 94
- Our VIDEO on how to report changes to Covered CA
- Lost your job? How to keep your Health Insurance. Shelter at Home VIDEO
- References & Links
- Here's instructions.
- Our opinion & short cut * 6 pages of questions - way too complicated, easy to mess it up, lose subsidies and/or go into Medi-Cal - Just give the bottom line in MAGI Household Income
- If you've appointed us - instructions - as your broker, no extra charge, we can do it for you.
- Voter Registration
- Task Guide Phone - Voter Registration
- Denial of benefits and possible criminal charges if you don't report changes in income!
- Visit our webpage on how to report changes