Form 8962

[pianolady]

Good morning.  I have a client who needs to complete Form 8962 but I must confess I am a bit confused over Line 6. The client received insurance through the marketplace January through August. Then there was a job change (moving from self employment to W-2 employment) and the client's family size changed in December with the birth of twins. They cannot remember if the Marketplace estimated at the time of enrollment that their income would be at least 100% but not more than 400% of the federal poverty line for their family size. The answer to this question needs to be YES in order to qualify for the PTC. However, even if it would be NO, I can see no path of where to indicate that on the Form. I'm hoping someone has insight into this situation.

Thank you in advance, Dawn.

[Just-Lisa-Now-]

You've entered the 1095A into the return?  It should do the rest for you automatically. 

But be sure to answer the question on the federal information worksheet whether the TP can be claimed as a dependent by someone else, or it wont calculate.

[qbteachmt · Accepted solution]

The Marketplace doesn't make the determination as to % of poverty level. They did it; they log into the Marketplace account that they established, they review their application that is on file, and they update their application with their life changes. Before doing so, they can see what their most recent set of answers are for the current status.

[pianolady]

Interesting. The client said that someone helped them by phone. Probably just don't remember. Have you had those who applied knowing they made less than the poverty level? There doesn't seem to be a place to declare that. ? 

Thank you for replying, 

Dawn 

[pianolady]

Hello, 

I did enter the 1095 and it does show the client qualifying for the PTC. However, in reading the directions, it seems like they shouldn't. 

Thank you for your reply, 

Dawn

[TaxGuyBill]

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@pianolady wrote:

if the Marketplace estimated at the time of enrollment that their income would be at least 100% but not more than 400% of the federal poverty line for their family size.

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Did the Marketplace give Advance credit?  If so, the Marketplace DID estimate that their income qualified.

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@pianolady wrote:

The answer to this question needs to be YES in order to qualify for the PTC. However, even if it would be NO, I can see no path of where to indicate that on the Form.

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The answer needs to be YES if the taxpayer's income ends up OUTSIDE of the qualifying range.  If it the taxpayer's income is withing the qualifying range, it does not matter.

[qbteachmt]

I'm a bit confused over what is the question here.

"I did enter the 1095 and it does show the client qualifying for the PTC"

Okay, then.

For 2020, it's moot now that they are covered by an employer plan.

And even if a navigator helped them, their application still exists with the Marketplace. If they never had a log in, then they should use their phone access to reach a person who can look up that application, if it matters now. For 2019, there is reconciliation for what happened in reality.

[Just-Lisa-Now-]

I know with Covered California, if your income is too low, you won't qualify for marketplace coverage, you end up with Medi-Cal.

[pianolady]

Thank you, 

I considered that too, as far as a Medicaid type solution if they declared that they were under the poverty level. 

Its too bad there isn't a definitive yes/no path on Line 6, but it sounds like the form will have to do. 😉 

Thank you for your input,

Dawn 

[TaxGuyBill]

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@pianolady wrote:

Its too bad there isn't a definitive yes/no path on Line 6, but it sounds like the form will have to do. 😉 

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You keep mentioning Line 6, but haven't explained the situation.  *IS* the taxpayer's income between 100% and 400%?

If not, DID the Marketplace give them Advance Premium Tax Credit when they enrolled with the Marketplace?

[pianolady]

Thank you, 

That is very helpful. 

Cheers, 

Dawn

[pianolady]

Hello, 

The client's income ended up being less than the poverty level. In January, the client was self-employed, but in the last quarter, the client went to work for W-2 income.   Clients added two dependents in December (twins). Yes, clients received advanced  premium credit. 

I hope that helps, 

Dawn

[qbteachmt]

@pianolady 

"Yes, clients received advanced premium credit. "

Okay, so they did get an Advanced Premium Tax credit (meaning, it was paid out as applied to the premium they owed, to reduce their payment requirement)?

Bill has asked Twice, so this makes Three Times. It matters to their determination.

Read the Specific instructions for Line 6 here:

https://www.irs.gov/pub/irs-pdf/i8962.pdf

Because it tells you what happens when the projection is to fall between 100% and 400% and then you fall short of this.

[TaxGuyBill]

So there is a definitive yes/no for Line 6.

The Instructions indicate to say "No" if you meet the qualifications.

As as I mentioned above, if the Marketplace gave Advance credit, that means that they DID accept the estimate of income to qualify (which allows you to check "no").

[pianolady]

Hello, Yes, they did get the Advanced Premium Credit.  

I had printed the instructions already, and thought that I had read it thoroughly with highlight and all. 

However, I now see that the question on the Form says: 

Did you enter 401% on Line 5? (See instructions if you entered less than 100%)

I checked No because what I didn't realize was that the instructions said to only check No if the % was more than 100 but less than 400.  

I know suspect I shouldn't have checked either box and just filled out the information below. 

Thank you very much for your advice, 

Dawn 

[qbteachmt]

Glad to help. Sometimes it just takes a fresh review.

[pianolady]

Absolutely!

Have a great weekend, 

Dawn