1040X and 8962

[tomead64]

I have a situation I have never encountered.  A client that did their own taxes last year added $15K in expenses on a property sold to the profit and not to the cost basis.  This put her income to where she paid $5258 in taxes that year and recently got a bill for $6K that she has to pay back in premium tax credits.  In an effort to recreate a 1040 to base the 1040X off of so she could file it along with an 8962.  I discovered the mistake and her liability should have been $444.00 and not $5258.00 and she also fell below the maximum income for the premium tax credit. So my question is does she need to file a form 8962 when the 1040X shows her income much lower than what the demand for repayment is based on?  Any guidance here, or am I in the wrong place?

[Just-Lisa-Now- · Accepted solution]

Just so we have the circumstances correct here:

1. Client filed their own return for 2018 and did NOT include the 1095A and 8962.

2. Client recently got the dreaded IRS letter requesting the 1095A and 8962, sent them in and got the bill for the payback of the APTC.

3. Going through the 2018 return you find an error that if corrected, means they had less of a tax liability in 2018 and changes the payback of APTC.

4. You are preparing a 1040X for 2018 which will correct the error and change the APTC payback...so all forms that changed from the original will need to be included with the 1040X, including the correctly computed 8962.