It’s time for a Premium Tax Credit check-up

August 10, 2016

While you may be tempted to forget about taxes at the end of the filing season, there is still time to receive the benefits of many tax credits.

When you applied for assistance to help pay the insurance premiums for 2016 health coverage through the Marketplace, the Marketplace estimated the amount of your Premium Tax Credit (PTC). But life changes between then and when you go to file your tax return next year can create changes to that income estimation, which will affect the final PTC you are eligible to claim on your return.

Life changes such as having a baby, adopting a child, getting a new job or losing one, moving to a different address, receiving a monetary award or other increases or decreases in income, among other changes, can all affect your actual total income come tax time.

Receiving lump sum payments such as Social Security Disability Insurance or even taking out a lump sum from your retirement account can have a major impact on your PTC eligibility. When you file your federal income tax return, the IRS will either subtract the difference between those advanced payments of PTC paid on your behalf and the actual PTC you are eligible for from your refund or add it to your taxes owed.

Doing a PTC check-up now will help you avoid large differences between the advance credit payments made on your behalf and the amount of the PTC you are allowed when you file your tax return next year.

Our Taxpayer Advocate Premium Tax Credit Change Estimator can help you estimate how your PTC will change if your income or family size changes during the year. However, the PTC estimator does not report changes in circumstances to your Marketplace, so be sure to also report any changes directly to your Health Insurance Marketplace and adjust the amount of your advance payments of the premium tax credit at the same time.

For more related information, see our article titled, Premium Tax Credit: 3 ways to reduce the chance of owing taxes, or see the Claiming the Credit and Reconciling Advance Credit Payments page, or File Now: Don’t Jeopardize Your Advance Payments of the Premium Tax Credit if you haven’t filed yet on IRS.gov/aca.