Premium Tax Credit (Form 8962) - Below Federal Poverty Line Exception

[DangMike]

My client:

HOH

$6,392 taxable dividend/interests

$-3,000 capital loss

$8,321 taxable retirement 

Received a 1095-A and paid monthly premiums of $874.76(total $10,497).

Received no Monthly Premium Tax Credit in 2019.

Her income falls below 100% of the federal poverty line sitting at 71%.

Because she purposely decided she did not want to receive a monthly premium tax credit for her health insurance every month and just receive it all in one lump sum when she files her taxes at the end of the year, she was not able to do so in 2019 because:

1. her income was below 100% of the federal poverty line

2. she did not receive any monthly premium tax credit

otherwise she would qualify to receive all of what she paid monthly back as the PTC. 

I am trying to figure out a way to help her get her money back from the marketplace as the software will not calculate her PTC because no she opted to not receive any monthly PTC. Has anyone ever run into this issue and how were you able to resolve it?

Thank you!

[Just-Lisa-Now-]

Be sure youve marked the box on the Fed info worksheet that she cant be claimed as a dependent of anyone (it should show as a red error on the list of forms on the left), otherwise the 8962 doesn't calculate.

[DangMike]

Thanks, the box is marked and there are no errors. The issues lies with the fact her income is below 100% the federal poverty line and that she opted not to receive monthly PTC. I added $1 as a monthly advance payment of the PTC and she received the PTC for the whole year just to test my theory.

It seems wrong that just because she choose to not receive monthly advance payment of the PTC every month and to receive it at the end of the year, we cannot calculate the PTC for her. 

from 8962 instructions: (Pg. 8, Line 6.)

You may qualify for the PTC if your household income is less than 100% of the federal poverty line and you meet all of the following requirements.
•
You or an individual in your tax family enrolled in a qualified health plan through a Marketplace.
•
The Marketplace estimated at the time of enrollment that your household income would be at least 100% but not more than 400% of the federal poverty line for your family size for 2019.
•
APTC was paid for the coverage for one or more months during 2019.
•
You otherwise qualify as an applicable taxpayer (except for the federal poverty line percentage).

She meets the exception for all except he last part because APTC was not paid for 1 or more months in 2019, she cannot take the PTC. This is a difference of almost $9,000 for her just because she thought she would receive the PTC automatically at year end when she files her return.

Thank you

[Just-Lisa-Now-]

@TaxGuyBill  is the ACA guru, but I do remember seeing somewhere that if your income is too low, you wouldn't qualify for the APTC.

[DangMike]

Thank you, It's true if your income is too low(below 100% of the federal poverty line) then you wont qualify to take it, unless they meet the exception above, and she does except for the fact that she opted to not receive a monthly advance of the PTC, and therefore is screwed out of almost $9,000 because she thought it would automatically come back to her at year end when she files taxes.

[TaxGuyBill · Accepted solution]

There is nothing to resolve; she doesn't qualify for the credit.

As you see, it was a poor choice to not take the Advance credit.  During the year, if she realized that her income was going to drop that much, she should have checked if she could get Medicaid.

A hard lesson learned for her.

[qbteachmt]

You didn't mention which type of capital loss that is. Perhaps it is something that can be deferred or suspended and carried forward.

[DangMike]

Thanks Bill, not the answer I was wanted, but the answer I needed to finish the return.