IRS Form 8962 – What is & How to Fill Out?

Form 8962

If you are a working professional, and file income tax and are paying premiums for any Healthcare plans, then knowing about Form 8962 is integral and beneficial for your tax returns. It is to calculate the amount of Premium Tax Credit (PTC) and balance it with the advance payment of the Premium tax credit (APTC). This is a useful trick for some individuals to save on their income tax.

What is Form 8962?

Form 8962 is to calculate and claim the Premium Tax Credit (PTC). The PTC is a refundable tax credit that you can claim by eligible tax payers and families earning and falling between the zero to moderate incomes. This is to aid the taxpayers afford and benefit from the health insurances purchased through the HealthCare.gov.

form 8962

But, before we delve into what the Form 8962 is and what are its specific instructions, it is important to know who files IRS form 8962.

Who is Eligible to File the Form 8962?

To be eligible to file the Form 8962 and claim the consequent tax credit, one needs to himself (or a member of the family) needs to have health insurance through the Affordable Healthcare Act. This is known as the exchange or the Health insurance marketplace. Therefore, if you are receiving healthcare from your employer (and get a 1095-C Form) you cannot file the Form 8962.

A taxpayer needs to meet all the requirements below, to be eligible for the credit qualifications:

  1. You have to buy the health insurance through the marketplace.
  2. The income limits should be fall in (between 100% – 400% of the federal poverty line.)
  3. Make sure that you are not dependant on another person’s tax return.
  4. You are not supposed to be under the category of “married filing separately.”
  5. You cannot be a recipient of healthcare from your employer.

Points of Attention Before Filing Form 8962:

These are some of the points that you need to be thorough with before your filing process. This checklist helps keep in check the authenticity and the validation of your filing process.

  1. Either you, or a member of your family needs to be a recipient of a health plan that has been brought under the “Market Plan”.
  2. As a recipient, you are lawfully present in the United States for residency.
  3. An additional Form 1095-A is required to complete the filing of Form 8962.
  4. This is sent by the marketplace, and if you do not receive this by early February, you need to contact the marketplace.
  5. The Marketplace’s estimate of the PTC is liable to determine the eligibility you hold for the APTC.

A Complete Guide to IRS Form 8962 Instructions:

If you are wondering how to fill out form 8962, you can refer to the detailed steps below to get a complete understanding.

Step 1: You first need to get hold of the IRS form 8962. Here are some of the sources, you can obtain it from:

– The Department of Treasury

– The IRS website

– Simply click here. (Please add hyperlinks on all the three sources)

Step 2: You will now receive a PDF file of the form. We will be using this to start the filing process.

At the top of the form, you need to fill out your name as stated in your return and Social Security Number.

Step 3: We will then proceed with the “Part 1” of the form. Start by adding the exemptions from the provided from 1040-A in the first line. The line 2A and 2B should have the amounts related to the modified AGI. Line 3 requires you to add the Household Income; for that, simply add the amounts in line 2A and 2B. To fill out line 4, you simply need to choose the appropriate option and fill in the value. In line 5, you need to add the household income in terms of the percentage of Poverty Line. If your value is above 401%, simply skip to line 7.

  1. $12,490 for one individual
  2. $16,910 for a family of two
  3. $21,330 for a family of three
  4. $25,750 for a family of four
  5. $30,170 for a family of five
  6. $34,590 for a family of six
  7. $39,010 for a family of seven
  8. $43,730 for a family of eight

All the income values are with subject to the recent updated as of 2019.

Step 4: In Line 7, you need to add the required figure; and consequently, add the annual contribution amount in Line 8.

Step 5: We will now move onto Part 2 of the IRS form 8962. This part is called the “Premium Tax Credit Claim and Reconciliation of Advance Payment of Premium Tax Credit.” After choosing the appropriate options on Line 9 and 10, move to Line 11. There is a small table, where you have to fill out the monthly amounts under each space column-wise. This will take you to fill out Lines 12-23. Below the table, you will find the Line 24, where you will add the Total PTC (Premium Tax Credit!) After that, is the Line 25, where you need to enter the Advance payment of this PTC.

Step 6: We will not proceed to the Part-3 of the form. This is called the “Repayment of Excess Advance Payment of the Premium Tax Credit). We shall continue with Line 27, where you require to enter the ‘Advance Premium Tax Credit’.

Step 7: We have reached the fourth part of the form, which is also called the “Shared Policy Allocation”. This part lengths from line 30-33. You have to enter the values in the table given, which includes:

– Field a for Policy Number.

– Field b for SSN.

– Add the allocation beginning month in Field c.

– In Field d, add the allocation ending month.

– Field e, should have the premium percentage.

– Add the SLCSP percentage in field f.

– You need to add the advance payment for the PTC percentage in field g.

Step 8: We have finally come to Part V of the form. This part is called the “Alternative Calculation for Year of Marriage”. When you come to line 35, you need to add the alternative entries for your Social Security Number in field a, b, c, and d. When you come to line 36, add the alternative entries for your spouse’s SSN on fields a, b, c, and d.

You have now successfully completed the filing of the Form 8962.

How To Claim Your Rightful Premium Tax Credit:

In order to qualify for Advance Tax payments on your health insurance, you need to file a tax return.

Therefore, you have to submit the Form 8962, failing which makes the IRS ask and demand for your PTC information.

This is a time-consuming process and can easily be averted by being vigilant and proactive with your filing.

Additionally, you require to report a taxable income in order to receive a tax return. In case you do not have income, you can report it to be $1.

If you are looking for a tax expert to help you streamline your Form 8962, and know the correct filing and submission procedures, worry no more!

Our team of tax experts at Accounts Confidant have you covered. To know more on how we can help you in your tax filing, you can call us on our number +1-888-660-0575 and get started today!

Wrapping Up:

Form 8962 is an essential tax form that not only helps relieve the pressure of your return, but also makes affordable health insurance through the marketplace, viable to everyone. The deadline for the IRS Form 8962 for the year 2020 is 15 April 2020.

We hope that with the help of this blog, you are able to figure whether you are eligible to file the form, the specified instructions and the points of caution. If you need any further assistance, you can contact our team at Accounts Confidant today!

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