avoid the advanced premium tax credit payback

[andy595]

 My client had the market place insurance for a few months in 2019 then found a full time job , with benefits and full health insurance coverage , how can I avoid the pay back of the premium tax credit?

[Just-Lisa-Now-]

Hopefully they canceled that marketplace policy quickly so they didnt end up with a full years worth of APTC to payback.

You need to find a way to reduce their MAGI, do they qualify to make an IRA contribution?  

[andy595]

Thank you Lisa ........ yes, they did cancel the policy but it does not seem fair . They made the exact salary during the 4 months at the market place that they estimated , then received a large raise when they started at the new employer that offered full benefits including health insurance , now the IRS wants $527 ( advanced premiums) back when they did everything correct.

Any suggestions beside the IRA , which was an excellent idea. 

[Just-Lisa-Now-]

I agree, its not fair, its a faulty system, but its what we have to work with. 

Ive seen some huge paybacks, $527 isn't too horrible.  Ive heard that filing MFS might be an option and would limit payback (Im in a Community Property State, which rarely works out well MFS, so Ive never really looked into it), but with only $527 payback, Im not sure that MFS would do much either.

Thats all I got Andy, sorry.  Maybe someone else has some better ideas.

[andy595]

thanks again , he is single so I'm going to work with him on the IRA idea , you are the best , by far !!!

[andy595]

Hi Lisa ,

I have a client that was paying the correct market place premiums for 2021 and decided to sell a piece of rental property on 12/08/21 for a large gain. Upon completion of his return , per form 8962 , he now owes an additional PTC repayment of $14,576 .

Is their any remedy to reduce the amount , the gain was in the last month of the year.

[Just-Lisa-Now-]

Yea, that was really poor planning on his part. I think he's pretty much stuck. Did he come to you for tax planning prior to the sale? I would have encouraged them to push the sale into the new year if the sale took place in December.

[andy595]

Thank you so much , yes and no on the planning , I tried to get him to sell it in 2020 for numerous reasons, he hesitated , then  sold it in December 2021 without calling me.

You have always been the best , thanks again for the quick response.