Form 8962 How to calculate if portion of the month is covered by Employer and remaining 8 months covered by 1095-A Market Place.

[Rogelio7_1951]

I have a client who worked for a hotel and was covered by the Company's Insurance for 3 months (Jan to March) but because of Pandemic, it resulted to temporary closure of the business. He applied to market place effective May to December, and was provided a 1095A covering 8 months period. In calculating Form 8962, because his total modified AGI is $52,592.00 in cluding what he received from EDD, his Household income as a percentage of federal poverty line  is 401%., and calculated his excess advance payment of PTC in Part III is 3008.00. how could I reduce this amount, as I wanted to make monthly calculation as it states  in Publication 5187 that TAXPAYERS WHO RECEIVE 1095-A HEALTH I NSURANCE FR MARKETPLACE SHOWING CHAN GES IN MONTHLY AMOUNTS MUST DO A MONTHLY CALCULATION TO DETERMINE THE PREMUIM TAX CREDIT IN SEC 2 OF FORM 8962. TAXPAYERS WHO HAVE CHANGES IN MONTHLY AMOUNTS NOT SHOWN IN FORM 1095A (FOR EX. A TAXPAYER ENROLLED IN QUALIFIED HEALTH PLAN BECAME ELIGIBLE FOR EMPLOYER COVERAGE DURING THE YEAR BUT DID NOT NOTIFY THE MARKETPLACE) MUST ALSO DOI A MONTHLY CALCULATION TO DETERMINE THIER PREMUIM TAX CREDIT. PLS HELP ME HOW TO DO THIS IN MY INTUIT.

[Just-Lisa-Now-]

Would contributing some money to an IRA be an option to bring the income down enough to get below the 401%?

I had one guy saved $7000 APTC payback last year by putting $825 in an IRA.

[TaxGuyBill · Accepted solution]

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@Rogelio7_1951 wrote:

because his total modified AGI is $52,592.00 including what he received from EDD, his Household income as a percentage of federal poverty line  is 401%.,

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[EDITED for my error, see additional comments later.]

In direct answer to your question, the program already does the monthly calculations (Lines 12-23 of the 8962), but it is still based on the annual income, not just the income from the months that taxpayer had Marketplace insurance.

But as Lisa mentioned, contributing to a Traditional IRA might fix things.  

[Rogelio7_1951]

Modified AGI is $52,591.00. 

4. Federal Poverty Line  .... 12,490.00

5. Household Income as a percentage of federal poverty line ...  401%

These are all taken from automatic calculation from Form 8962

[TaxGuyBill]

Oops, I looked at the wrong numbers.  Sorry about that.

He is actually at 421% (Form 8962 shows 401% for anything over 400%).

So 400% is $49,960.  As Lisa pointed out, if the taxpayer can contribute $2631 to a Traditional IRA, that would lower his MAGI down to 400% (due to rounding, the taxpayer can probably contribute less than that).  That will qualify him for the Premium Tax Credit.  That is a great way for him to save a lot of money.