This article will help you with frequently asked questions about the Premium Tax Credit, including how to resolve diagnostic ref. 42135, how to complete Form 8962 when your client can claim the self-employed health insurance deduction, and how to generate less common sections of the form in Intuit ProConnect.
For tax years 2023-2025:
Taxpayers with a household income that exceeds 400% of the federal poverty line for their family size may be allowed a PTC. For more information, click here.
For more information, refer to the IRS Questions and Answers on the Premium Tax Credit.
American Rescue Plan impact
The American Rescue Plan Act was signed into law on March 11, 2021, and eliminates the 2020 excess advance premium tax credit repayment for certain filers.
To apply the changes in ProConnect Tax:
- Go to the Input Return tab.
- From the left of the screen, select General and choose Misc. Info./Direct Deposit.
- From the top of the screen, select Miscellaneous.
- Only for TY2020: Mark the checkbox labeled Apply the American Rescue Plan Act provisions.
- This checkbox will apply the provisions on a client-by-client basis, and prevent changes from being applied to clients whose returns were already filed.
For clients who owe excess APTC repayment:
- Form 8962 won't be attached to the return.
- No repayment amount will be included on Schedule 2, line 2.
- The IRS won't correspond for a missing Form 8962 or ask for more information about the excess APTC.
For clients who can claim a net premium tax credit (PTC):
- Form 8962 will still be attached to the return.
- The calculated credit will still flow to Schedule 3, line 8.
Clients who previously submitted 2020 returns with excess APTC repayment should not file amended returns just to get a refund of this amount. For the latest information and guidance from the IRS, click here.
Does the 8962 still apply for tax years after 2018?
Yes. Under the Tax Cuts and Jobs Act, the individual shared responsibility payment was reduced to $0 for months beginning after December 31, 2018. Beginning in tax year 2019, Form 1040 no longer has a "Full-year health care coverage or exempt" box, and Form 8965 for Health Coverage Exemptions is no longer in use. Due to these changes, Forms 1095-B and 1095-C are no longer required to be entered into the tax return and should be kept by the taxpayer for their records.
However, if your client received Form 1095-A, Health Insurance Marketplace Statement, you'll need to enter that information on their tax return. The 1095-A is used to generate Form 8962 to reconcile any advance payments of the premium tax credit or claim the premium tax credit. Click here for more information.
Why is the tax year 2021 Form 8962, line 5 showing 133%?
If your client (or their spouse, if married filing jointly) received unemployment compensation for any week of 2021, their household income for purposes of this form is capped at 133%. See the Form 8962 instructions for more information.