What is Form 8962 and Its Purpose

• Form 8962 is used to claim the Premium Tax Credit (PTC), which helps eligible individuals and families pay for health insurance purchased through the Health Insurance Marketplace.
• The form calculates the amount of credit you are entitled to based on your household income, family size, and the cost of your health insurance premiums.
• It is typically attached to your federal tax return (Form 1040) to reconcile the advance payments of the credit made during the year with the actual credit you qualify for.
• If you received advance payments of the PTC, Form 8962 helps determine whether you owe money back to the government or are entitled to a refund.
• It is required for anyone who received advance premium tax credits during the year and is filing a tax return to reconcile those payments.

Who Needs to File Form 8962?

Form 8962, Premium Tax Credit (PTC), is required for individuals who received the Advance Premium Tax Credit (APTC) for health insurance purchased through the Marketplace. Here are the eligibility and requirements:

1. Receiving APTC: You must file Form 8962 if you received APTC for yourself, your spouse, or any dependents.
2. Claiming PTC: If you are claiming the PTC on your tax return, you need to reconcile the APTC received with the actual PTC calculated on Form 8962.
3. Dependents: If someone else enrolled a dependent in your tax family and APTC was paid for that individual, you must file Form 8962 to reconcile the APTC.
4. Applicable Taxpayer: You must be an applicable taxpayer, meaning you meet specific requirements related to income and coverage.

Key Sections of Form 8962: Important Parts and What They Cover

Form 8962, "Premium Tax Credit," is used to claim the premium tax credit for health insurance purchased through the Health Insurance Marketplace. The form includes several key sections that help determine eligibility and the amount of credit.

1. Part I Annual and Monthly Contribution Amount - This section involves determining the taxpayer's expected contribution toward health insurance based on household income, family size, and the Federal Poverty Line (FPL). It calculates the "applicable figure" used to find the monthly contribution amount.
2. Part II Premium Tax Credit Claim and Reconciliation of Advance Payment of Premium Tax Credit - Taxpayers use this section to calculate their actual Premium Tax Credit (PTC) and reconcile it with any advance payments (APTC) paid to their insurance provider. Information from Form 1095-A is required for these calculations.
3. Part III Repayment of Excess Advance Payment of the Premium Tax Credit - If the APTC received during the year was more than the PTC the taxpayer is eligible for, this section calculates the excess amount that must be repaid, subject to certain repayment limitations based on income.
4. Part IV Allocation of Policy Amounts - This section is used when a single Marketplace policy covers individuals in different tax households (e.g., divorced or legally separated spouses, or a child claimed as a dependent by another taxpayer). It is used to allocate enrollment premiums, SLCSP premiums, and APTC between the separate tax families.
5. Part V Alternative Calculation for Year of Marriage - This is an optional calculation specifically for taxpayers who married during the year and are filing jointly. It provides a way to potentially reduce the amount of excess APTC they must repay by using a special "alternative monthly contribution" for the months before the marriage.

Each section is designed to ensure accurate reporting of health insurance costs and income to determine the correct premium tax credit amount for the tax year.

What's New for Form 8962: 2025 Updates

For the 2025 tax year, Form 8962, used to calculate and reconcile the Premium Tax Credit (PTC), includes updated guidance and instructions to reflect current tax law changes. Key updates include revised rules for determining tax family size, especially when someone can be claimed as a dependent, which affects eligibility and calculation of the PTC.

• Changes to “coverage month” definition for PTC/ APTC. As of January 1, 2025, a month may be considered a coverage month, and a PTC may be allowed for the month, if a portion of the enrollment premium for the month is unpaid but the amount of the premium paid, including by advance credit payments, is sufficient to avoid termination of the coverage under one of the scenarios described under Enrollment premiums, later. See Enrollment premiums, later, for more information.
• Reporting entities no longer required to send minimum essential coverage (MEC) forms automatically. In certain circumstances, reporting entities aren’t required to send tax forms to covered individuals showing proof of MEC (Forms 1095-B and 1095-C) unless a form is requested. If requested by the individual, the form must be provided by January 31, or 30 days after the date of request, whichever is later.

For more details on Affordable Care Act provisions related to the PTC, taxpayers can refer to IRS resources or contact the IRS Healthcare Hotline.

Related Schedules and Forms for Form 8962

Form 8962, used to calculate and reconcile the Premium Tax Credit (PTC), requires reference to several other forms and schedules to complete accurately.

• Form 1095-A: This form, issued by the Health Insurance Marketplace, provides essential data for Form 8962. Specifically, line 33 (columns A, B, and C) is used for line 11, while lines 12 through 32 (columns A, B, and C) are used for lines 12 through 23. Monthly amounts from Form 1095-A are required for detailed reconciliation.
• Schedule 3 (Form 1040): If there is an amount on line 26 of Form 8962, it must be entered on Schedule 3, line 9.
• Schedule 2 (Form 1040): If there is an amount on line 29 of Form 8962, it must be entered on Schedule 2, line 1a.
• Form 1040: The tax return itself is integral, especially for determining filing status, dependents, and household income. The tax family size calculation on Form 8962 depends on information from the Form 1040, including whether someone can claim you or your spouse as a dependent.

Additionally, when spouses or dependents are involved in different tax families (e.g., divorce during the year), both parties may need to use the same Form 1095-A data to complete their respective Form 8962s. Proper allocation of premiums and APTC is required to ensure each tax family can correctly compute their PTC.

Important Deadlines for Form 8962: When to File and Penalties for Late Filing

Form 8962, used to claim the Premium Tax Credit (PTC), must be filed with your federal income tax return. The deadline to file Form 8962 is the same as the deadline for filing your tax return—typically April 15 of the following year, unless extended.

• Filing Deadline: Form 8962 must be attached to your tax return (Form 1040, 1040-SR, or 1040-NR) by the tax filing deadline. Extensions for filing your return may also extend the deadline for Form 8962.
• Penalties for Late Filing: There is no standalone penalty for Form 8962 itself, but failure to file or reconcile APTC can result in repayment obligations, delayed refunds, penalties, interest, or loss of future advance credit eligibility.
• Required for Certain Taxpayers: If you received advance premium tax credit (APTC) during the year, you must file Form 8962 regardless of whether you are otherwise required to file a tax return.
• Married Filing Separately: If you are married filing separately and qualify under Exception 2 (e.g., domestic abuse or spousal abandonment), you must check the appropriate box on Form 8962 to claim the PTC.
• Software Assistance: Tax preparation software can guide you through adding Form 8962 during the filing process, ensuring accurate completion and timely submission.

Common Mistakes to Avoid on Form 8962

Taxpayers should avoid several common errors when completing Form 8962 to ensure accurate Premium Tax Credit (PTC) reconciliation and timely processing of their returns.

• Using incorrect or outdated Form 1095-A information: If you receive a corrected Form 1095-A, always use the corrected version for calculating your PTC. Do not rely on the original form if it has been superseded.
• Incorrectly reporting household income or family size: Ensure that the income and family size reported on Form 8962 match your actual tax return. Misreporting can lead to over- or under-claiming the credit.
• Failing to allocate premiums and APTC properly in joint or multiple tax families: If you are married but filing separately, or if there are multiple tax families involved, you must correctly allocate premiums, APTC, and SLCSP amounts to each family unit.
• Not filing Form 8962 when required: Even if you are not required to file a tax return, you must file Form 8962 if you received Advance Premium Tax Credit (APTC) during the year. You must use Form 1040, 1040-SR, or 1040-NR—Form 1040-SS is not allowed.
• Ignoring changes in circumstances: If your coverage family changed, you moved, or you did not notify the Marketplace, the applicable SLCSP premium on your Form 1095-A may be incorrect. You must determine the correct premium amount manually if needed.
• Misunderstanding tax family rules: If you or your spouse can be claimed as a dependent by another taxpayer, you are not included in the tax family size for Form 8962 purposes. This affects eligibility and credit calculation.
• Incorrectly completing Part IV for non-applicable taxpayers: If you or your spouse are not applicable taxpayers (e.g., not enrolled in a qualified health plan), you should not complete Part IV of Form 8962.

Helpful Tips for Completing Form 8962

Form 8962 is used to reconcile the Premium Tax Credit (PTC) you received during the year with the amount you’re eligible for based on your actual income and family size. To complete it accurately, follow these best practices:

• Use Correct Form 1095-A Data: For Line 11, use the total amounts from Form 1095-A, line 33 (columns A, B, and C). Do not use monthly amounts from lines 21–32.
• Check for “VOID” Forms: If your Form 1095-A has a “VOID” box checked, do not use it for completing Form 8962. It was sent in error and should be disregarded.
• Allocate Premiums Properly: If you’re filing separately from a spouse or partner, both parties must allocate enrollment premiums, APTC, and SLCSP premiums to compute their own PTC accurately.
• Complete Only Required Lines: If you are eligible to use the annual calculation method (Line 11), you do not complete the monthly calculation lines (Lines 12–23). If you have an amount on Line 26, transfer it to Schedule 3 (Form 1040), Line 9.
• Use Tax Software for Guidance: When filing online, use tax software to add Form 8962 under the Payments/Refundable Credits section. Follow on-screen prompts to ensure accuracy.
• Review for Common Mistakes: Double-check all entries to avoid overpayment, delays, or IRS correspondence. Ensure dependents are listed correctly and family size is accurate.

Source

• For more up-to-date information visit https://www.irs.gov Government website.
• For the most accurate and detailed information regarding which schedules and forms are necessary for your specific tax situation, refer to the Instructions for Form 8962 or consult a tax professional.

How to add Form 8962?

Software can guide you through how to add Form 8962 while filing your tax return using our Software. To add Form 8962 in the software, follow these steps:

1. From within your Tax return (Online), in the left menu (for mobile devices, tap the three dots in the top-right corner to see more options), click on Federal.
2. Under the Payments/Refundable Credits section, click on the Show more button near Premium Tax Credit, then click on Add or Edit next to Premium Tax Credit - Form 8962.
3. Follow the on-screen instructions.