Millions of Americans, who have purchased health care coverage through the Marketplace, have access to assistance to help pay medical bills through the Premium Tax Credit (PTC). PTC’s are only available through the Marketplace and are based on your household size and income. They provide support to pay your monthly premium if your household income falls between 100% and 400% of the Federal poverty Level (FPL). PTC’s are dispersed in the following ways:
Advanced Premium Tax Credit (APTC): You can choose to have your APTC’s sent directly to your insurance company. This helps reduce your monthly premium costs.
Premium Tax Credit: You receive a refundable credit when you meet the requirements and file a tax return. This could reduce what is owed to the IRS or increase the taxpayer’s refund.
Here are the reasons to claim your tax credit now:
If you earn less, than you could receive a refund when you file your taxes. To prevent any PTC deductions from your federal tax return, you should consider the following:
Take a refund credit. You don’t have to accept the full allotment. The funds that you decline will be reimbursed on your tax return, if you earned less. If you earn more, extra funds will result in a payment owed to the IRS.
You are forgiven. If you’ve made a mistake on your application, the ACA law permits a little forgiveness. The IRS may pardon a portion of advance premium tax credit overpayment. There may be caps on the requirements for repayment, depending on your income. The lower your income, the less you’d be expected to pay back.
When taking your finances into consideration, make sure that you reflect on any potential changes that may occur in the upcoming year. For example, if you know you’ll be receiving a raise or claiming fewer dependents on your tax return, you should consider accepting a smaller tax credit. If you can’t anticipate changes, make sure you update your Marketplace profile immediately, as those changes affect you and your household.
To find a Liberty Tax® ACA Advisor at your local Liberty Tax® office, call 800-673-8600 or visit www.healthcaretaxinfo.com.