Hey Kevin, I had a job change in December. I ended up applying for the affordable care act tax credits for just me as I wasn't going to get health insurance through my employer at that moment. Ended up getting really bad case of Covid in Feb and was admitted to the hospital. I'm just starting to get back to myself 4 months later. Unfortunately, I lost my job because of it. I'm still taking the full allotment of tax credits as I believe I can make the $13,590 to meet the minimum yearly income. If I was to come up short at the end of the year what would happen? Let's say, my yearly income ended up being $10,000. How much would I owe back? I'm getting around $350 a month in credits at the moment. Thanks, in advanced. Nick
There is no penalty or repayment of the Advance Premium Tax Credits if your final income is lower than anticipated and below the threshold for the subsidies. You do agree to report any income changes to Covered California within 30 days. That said, a temporary drop of income does not necessarily negate your original income estimate. Sometimes people receive unemployment benefits that are close to the original estimate.
Hi. Thanks for the video. If i can ask for clarification . . If i report im gonna make 24000 and end up making 28000 (my hours can vary a lot) will there be a $375 repayment cap for 2024. The chart i saw said 375 cap for anyone making under 29100. Just wanted to make sure this is accurate (filing single). Thank you
It is $350 for an individual under 200% FPL for 2023. It changes every year and I don't know about 2024. The limit is $900 repayment if the single filer income is between 200% and 300% FPL.
Just found out my adjusted gross income was way below the federal poverty rate I got over $9000 in subsidies but could not work due to illness. My AGI was only $3450. Am I going to need to repay that entire amount?
No, according to IRS information from form 8962, there is no mechanism for forcing people to repay subsidies they may not have been entitled to because their final income is below 100% of the federal poverty level.
@@KevinKnauss thank you so much for responding. That is what it indicated on the return but I was not sure it was correct. Your videos are clearing things up for me
My wife and I are both on the health exchange and get an APTC. I will drop off it in Sept and going on Medicare. Wife will stay on it till May 2024. My question is, do we still have to adhere to the estimated Monthly income stated for the year 2024 after she drops off the exchange in May or can out income increase the rest of the year without having to pay back some APTC?
My response is coming from my familiarity with IRS form 8962 where you reconcile the APTC you received during the year. In part 1 of the form, the household size and final income for the year is used to determine the consumer responsibility percentage and monthly subsidy based on the second lowest cost Silver plan. Assuming that you don’t move and have a different second lowest cost Silver plan for some months in the calculation, there seems to be no mechanism for discreetly applying a lower income in some months relative to other months. In other words, if a couple was receiving the APTC subsidy for the first 6 months of the year, left the Covered California exchange in July, then their income went up, the final income would be used to determine the annual subsidy. If you were receiving subsidies at $40,000 income, dropped Covered California, and the income increased to $80,000 later in the year, it is the $80,000 that would be used to determine the subsidy. Perhaps a couple was receiving a subsidy of $1,000 per month based on $40,000 for a total annual subsidy of $12,000. The income increases and when form 8962 is completed, the couple was only eligible for an $5,000 annual subsidy, or $417 per month. The couple would potentially have been paid an excess subsidy amount of $583 per month ($1,000 - $417). Potentially, the couple may have to repay $3,498 ($583 x 6 months.) The reverse is true. If a couple received $417 per month based on a high income estimate, but when they did their form 8962 with the lower income, they would be entitled to an additional $583 per month APTC for those months they were in the exchange. I would check with your tax preparer. It’s possible that I am missing something that might reduce the liability if the income increases after you leave the exchange. But from everything I have read, the subsidy is based on the annual income irrespective of realized income during the months of enrollment in the exchange. Final thought, if you win the lottery in December, and those funds are taxable income for the year, I see no way around repaying the excess subsidy now that your income is 7 figures instead of 5.
Thanks for the video. If I can ask for clarification. If I'm single and report I'm making 24000 this year but end up making say 28000 (my hours vary a lot) is there a repayment cap. I've read that it's gonna be 350 or 375 for 2024 if you're making under 29,100. So will 375 definitely be the maximum I have to repay? Thank you
Excess Premium Tax Credit liability is similar to any other tax you may owe. For some people, their tax credit can be greater than the repayment of the excess Premium Tax Credit, in which case, the repayment would just lower the final tax refund. Otherwise, if you owe taxes or the repayment of excess Premium Tax Credit, you just send the IRS a check along with the tax return.
Hi! I have a repayment of a tax credit of $4,000 and I am only getting $38 in refunds back this year. Is there a way I can appeal the tax credit? I had a salary increase last year and didn't know I was supposed to report it, I was also under my dads insurance and he was the policy holder and had already paid a tax credit. Why am I getting a separate tax credit? I would really appreciate some help
If the tax filer's household income is under 400% of the federal poverty level, there is a repayment limitation. However, if the final income is over 400% FPL, all of the excess Premium Tax Credits must be repaid. It sounds like you have other issues that may be contributing the the large repayment. If an individual is on their parent's health plan with subsidies, the parent has indicated they are taking the individual as a tax dependent. If that individual dependent earns enough money to pay federal income taxes, that income must be added to the primary tax filer's household income for the Premium Tax Credit reconciliation according to the instructions for IRS form 8962. You cannot receive subsidies under a parent's health plan and also receive Premium Tax Credit subsidies through an individual health plan. Someone is going to have to repay the excess PTC subsidies back to the IRS. You may want to sit down with a tax professional to sort through all of the details.
Very nice and clear explanation. You provided an excellent starting point for me to look into my own numbers. Thank you.
Thank you so much for the clear explanations!
You are welcome.
Hey Kevin, I had a job change in December. I ended up applying for the affordable care act tax credits for just me as I wasn't going to get health insurance through my employer at that moment. Ended up getting really bad case of Covid in Feb and was admitted to the hospital. I'm just starting to get back to myself 4 months later. Unfortunately, I lost my job because of it. I'm still taking the full allotment of tax credits as I believe I can make the $13,590 to meet the minimum yearly income. If I was to come up short at the end of the year what would happen? Let's say, my yearly income ended up being $10,000. How much would I owe back? I'm getting around $350 a month in credits at the moment. Thanks, in advanced. Nick
There is no penalty or repayment of the Advance Premium Tax Credits if your final income is lower than anticipated and below the threshold for the subsidies. You do agree to report any income changes to Covered California within 30 days. That said, a temporary drop of income does not necessarily negate your original income estimate. Sometimes people receive unemployment benefits that are close to the original estimate.
Hi. Thanks for the video. If i can ask for clarification . . If i report im gonna make 24000 and end up making 28000 (my hours can vary a lot) will there be a $375 repayment cap for 2024. The chart i saw said 375 cap for anyone making under 29100. Just wanted to make sure this is accurate (filing single). Thank you
It is $350 for an individual under 200% FPL for 2023. It changes every year and I don't know about 2024. The limit is $900 repayment if the single filer income is between 200% and 300% FPL.
@@KevinKnauss thank you very much
Just found out my adjusted gross income was way below the federal poverty rate I got over $9000 in subsidies but could not work due to illness. My AGI was only $3450. Am I going to need to repay that entire amount?
No, according to IRS information from form 8962, there is no mechanism for forcing people to repay subsidies they may not have been entitled to because their final income is below 100% of the federal poverty level.
@@KevinKnauss thank you so much for responding. That is what it indicated on the return but I was not sure it was correct. Your videos are clearing things up for me
@@larslarsheim1741 Excellent. Reducing the confusion is part of my goal.
Thank you so much this helps me greatly as well!!❤❤❤❤❤
My wife and I are both on the health exchange and get an APTC. I will drop off it in Sept and going on Medicare. Wife will stay on it till May 2024. My question is, do we still have to adhere to the estimated Monthly income stated for the year 2024 after she drops off the exchange in May or can out income increase the rest of the year without having to pay back some APTC?
My response is coming from my familiarity with IRS form 8962 where you reconcile the APTC you received during the year. In part 1 of the form, the household size and final income for the year is used to determine the consumer responsibility percentage and monthly subsidy based on the second lowest cost Silver plan.
Assuming that you don’t move and have a different second lowest cost Silver plan for some months in the calculation, there seems to be no mechanism for discreetly applying a lower income in some months relative to other months.
In other words, if a couple was receiving the APTC subsidy for the first 6 months of the year, left the Covered California exchange in July, then their income went up, the final income would be used to determine the annual subsidy. If you were receiving subsidies at $40,000 income, dropped Covered California, and the income increased to $80,000 later in the year, it is the $80,000 that would be used to determine the subsidy.
Perhaps a couple was receiving a subsidy of $1,000 per month based on $40,000 for a total annual subsidy of $12,000. The income increases and when form 8962 is completed, the couple was only eligible for an $5,000 annual subsidy, or $417 per month. The couple would potentially have been paid an excess subsidy amount of $583 per month ($1,000 - $417). Potentially, the couple may have to repay $3,498 ($583 x 6 months.)
The reverse is true. If a couple received $417 per month based on a high income estimate, but when they did their form 8962 with the lower income, they would be entitled to an additional $583 per month APTC for those months they were in the exchange.
I would check with your tax preparer. It’s possible that I am missing something that might reduce the liability if the income increases after you leave the exchange. But from everything I have read, the subsidy is based on the annual income irrespective of realized income during the months of enrollment in the exchange.
Final thought, if you win the lottery in December, and those funds are taxable income for the year, I see no way around repaying the excess subsidy now that your income is 7 figures instead of 5.
Thank you. @@KevinKnauss
Thanks for the video. If I can ask for clarification. If I'm single and report I'm making 24000 this year but end up making say 28000 (my hours vary a lot) is there a repayment cap. I've read that it's gonna be 350 or 375 for 2024 if you're making under 29,100. So will 375 definitely be the maximum I have to repay? Thank you
Does the IRS take the money out of the bank or how do I pay it back?
Excess Premium Tax Credit liability is similar to any other tax you may owe. For some people, their tax credit can be greater than the repayment of the excess Premium Tax Credit, in which case, the repayment would just lower the final tax refund. Otherwise, if you owe taxes or the repayment of excess Premium Tax Credit, you just send the IRS a check along with the tax return.
Why, I am having to pay back something that was denied within the same month when I applied 07/01/23 -07/10/2023 (term)
You'll need to be more specific. What was denied? What are you repaying?
Hi! I have a repayment of a tax credit of $4,000 and I am only getting $38 in refunds back this year. Is there a way I can appeal the tax credit? I had a salary increase last year and didn't know I was supposed to report it, I was also under my dads insurance and he was the policy holder and had already paid a tax credit. Why am I getting a separate tax credit? I would really appreciate some help
If the tax filer's household income is under 400% of the federal poverty level, there is a repayment limitation. However, if the final income is over 400% FPL, all of the excess Premium Tax Credits must be repaid.
It sounds like you have other issues that may be contributing the the large repayment. If an individual is on their parent's health plan with subsidies, the parent has indicated they are taking the individual as a tax dependent. If that individual dependent earns enough money to pay federal income taxes, that income must be added to the primary tax filer's household income for the Premium Tax Credit reconciliation according to the instructions for IRS form 8962.
You cannot receive subsidies under a parent's health plan and also receive Premium Tax Credit subsidies through an individual health plan. Someone is going to have to repay the excess PTC subsidies back to the IRS. You may want to sit down with a tax professional to sort through all of the details.
Thank you so much for your help. I will probably go and see a tax specialist about this.