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How to Get Premium Tax Credit from the IRS?

How to Get Premium Tax Credit from the IRS

IRS collects all the tax payables from persons and businesses. However, the IRS reconciles the tax amounts in specific cases. The reconciling needs Form 8962 for the Premium Tax Credit. This will be a relatively simple way to get the tax returns. SG INC CPA will assist you in filling it out for a single person who had uniform coverage of health care taxes throughout the entire tax year. These variations can affect this form if you have a more complicated scenario.

What is this Form, and Who Needs It?

As a tax credit applicant, you will have to complete this form 8962—a premium tax credit for new claimants. If you sign up for health insurance through the Health Insurance Marketplace in the U.S., you indicated that you were a low-income taxpayer.

Validity of Premium Credit on Tax

If you’re a low-income taxpayer, you can get what’s called the premium tax credit. This basically says your gross premium is X, which gives you an advance credit of Y. So the amount of cash that you actually have to send as health care taxes every month is just the difference. It’s very favorable because it means that you’re getting health insurance at a much lower cost. You’re going to qualify for the healthcare premium tax credit anyway at the end of the year.

Starting Off with the Form 8962

We go to the name that’s shown on your tax return at the top line. We suppose it to write John Doe with the Social Security number. Since this is a single person, we don’t need to check the box that says you cannot take the premium tax credit if you’re filing status is married filing separately, unless you qualify for an exception of an insurance tax credit. Please follow the instructions for that one.

Part I

Before we get into Part I, note that since this example is for a single person, not married or with other variations, we won’t fill out Part IV or Part V. You can find helpful information on those parts in the instructions. We will quickly discuss the instruction age here, which you can also get online. It’s pretty lengthy, but some of it is very helpful in filling out form 8962 – premium tax credit. We use these instructions to help us fill out certain parts of the form 8962.

Part II

Tax family size: Since it’s a single person, there is no family size to give.

Modified AGI Line 3: Enter that particular number. See the instructions to calculate your adjusted gross income. We’ll go back to the instruction page to go through this process. For this, we take a simple $20,000 for t e adjusted gross income.

Dependents: No dependents for this example, so we’ll leave that box blank.

Household income: Add the amounts from 2a and 2b. Simple enough, just $20,000.

Federal Poverty Line

Line 4: Here, you will enter the federal poverty line amount from Table 1-1, 1-2, or 1-3. We consider this person to reside in a state other than Alaska and Hawaii. For a pet family size of one, the amount to enter in line 4 is $11,880.

Line 5: You need to calculate Household income as a percentage of the federal poverty line. Our CPAs will help you with the calculation.

 Line 6: Did you enter 401% on line 4? If yes, you are not eligible for the tax credit. Since we entered less than 401%, we lead to line 7.

Line 7: Applicable figures. Using your line 5 percentage (168%), it is according to your applicable figure on the table in the instructions, which is 0.0493.

 Line 8a: Annual contribution amount. Do the Multiplication o line 3 by line 7 to get $20,000 0.0493 = $986.

 Line 8b: Monthly contribution amount. Divide line 8a by 12, rounding to the closest whole dollar: $986 / 12 ≈ $82.

 Line 10 and Beyond

 Line 10: Are you allocating policy amounts to another taxpayer? For this single-person example, we’ll use the healthcare premium tax credit. We will move to the Line 11 for this operation.

 Line 11: Since the person had the same coverage throughout the year, we can use the annual totals.

  • Annual enrollment premium: For example, $3,000.
  • Annual applicable SLCSP premium: For example, $5,000.
  • Annual contribution amount: Line 8a, which is $986.
  • Annual maximum premium assistance: $5,000 – $986 = $4,014.
  • Annual premium tax credit allowed: The smaller of $3,000 (A) or $4,014 (D), so $3,000.
  • Annual advanced payments of the tax credit: For example, $2,000.

Line 24: Your total tax credit is $3,000.

Line 25: Advanced payments of the tax credit, $2,000.

Line 26: Net the tax credit: $3,000 – $2,000 = $1,000.

Since we are not repaying excess advance payments, we skip the remaining lines.


Long and short of it, the advanced premium credit is all about filling out form 8962 correctly. SG INC CPA can assess an advanced credit for having health insurance through the Marketplace. However, you need to fill out the 8962 if you get the 1095-A at the end of the year. Because you need to figure out the validity scenario, you can apply for these healthcare tax credits if you have not yet refunded any of the healthcare premium tax credits or insurance tax credits.

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