Phoenix CPA | Premium Tax Credit
You are allowed a premium tax credit only for health insurance coverage you purchase through the Marketplace for yourself or other members of your tax family. However, to be eligible for the premium tax credit, your household income must be at least 100, but not more than 400 percent of the federal poverty line for family size. An individual who meets these income requirements must also meet other eligibility criteria.
The amount of the premium tax credit is based on a sliding scale, with greater credit amounts available to those with lower incomes. Based on the estimate from the marketplace, you can choose to have all, some or none of your estimated credit paid in advance directly to your insurance company on your behalf to lower what you pay out of pocket for your monthly premiums. These payments are called advance payments of the premium for paying the full monthly premium.
If the advance credit payments are more than the allowed premium tax credit, you will have to repay some or all of the excess. If your projected household income is close to the 400 percent upper limit, be sure to consider the amount of advance credit payments you choose to have paid on your behalf. You want to consider this carefully because if your household income on your tax return is 400 percent or more of the federal poverty line for your family size, you will have to repay all of the advance credit payments made on your behalf.
If the advance payments are less than the allowed premium tax credit, you will receive a refund for the difference.
If you have any questions and would like to discuss this further, please do not hesitate to contact us at Dusseau & Makris, PC, your Phoenix CPA firm.