Article Summary
The article focuses on the process of reconciling the premium tax credit for individuals who used it to lower their Marketplace plan premiums in 2023. It explains the importance of using Form 1095-A to complete IRS Form 8962, which determines the final amount of the tax credit based on actual income. Any discrepancies between the credit used and the credit qualified for will impact tax refunds or amounts owed. The article also provides step-by-step guidance to ensure accurate reporting and compliance with IRS requirements.
What This Means for You
- If you used the premium tax credit in 2023, ensure you have your Form 1095-A ready to complete Form 8962 accurately.
- Reconciling your tax credit can affect your tax refund or amount owed, so double-check your calculations to avoid errors.
- Follow the provided step-by-step directions to streamline the reconciliation process and avoid penalties.
- Failing to reconcile your premium tax credit could result in delays or audits, so act promptly before the tax deadline.
The time to file taxes is almost over. Here’s what to know
Published on April 4, 2024
How to “reconcile” your tax credit
If you (or anyone in your household) qualified for or used the premium tax credit to lower your Marketplace plan premium at any point in 2023:
- You’ll use your Form 1095-A to fill out IRS Form 8962, Premium Tax Credit (PDF, 110 KB) to reconcile your 2023 premium tax credit when you file your taxes.
- Any difference between the amount of premium tax credit you used last year and the premium tax credit you actually qualify for based on your final income will affect your refund or taxes you owe.
- Report any differences on your taxes and include Form 8962 when you file.
- Get step-by-step directions on how to reconcile.
People Also Ask About
- What is Form 1095-A? Form 1095-A is a document from the Health Insurance Marketplace that provides details about your health insurance coverage and premium tax credits.
- How do I know if I need to reconcile my premium tax credit? If you received advance payments of the premium tax credit, you must reconcile it using Form 8962 when filing your taxes.
- What happens if I don’t reconcile my premium tax credit? Failing to reconcile can result in delays in processing your tax return or potential penalties from the IRS.
- Can I still file my taxes if I haven’t received Form 1095-A? You should wait for Form 1095-A before filing, as it is essential for accurately completing Form 8962.
Expert Opinion
Reconciling the premium tax credit is a critical step for ensuring compliance with IRS regulations and avoiding financial penalties. As tax deadlines approach, individuals should prioritize gathering necessary documents like Form 1095-A and carefully follow IRS guidelines to complete Form 8962. This process not only ensures accuracy but also helps taxpayers maximize their refunds or minimize their tax liabilities.
Key Terms
- Premium tax credit reconciliation
- Form 1095-A Health Insurance Marketplace
- IRS Form 8962 instructions
- Tax credit impact on refunds
- Health insurance tax filing requirements
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