Apr 13, 2021
Under the American Rescue Plan Act of 2021, taxpayers no longer have to increase their tax liability by their excess advance payments of the Premium Tax Credit for tax year 2020. A taxpayer's excess APTC is the amount that their advance payments of the Premium Tax Credit (APTC) exceed their Premium Tax Credit.
Taxpayers who have already filed their 2020 tax return and who have excess APTC for 2020 don’t need to file an amended tax return or contact the IRS. The IRS will reduce the excess APTC repayment amount to zero with no further action needed by the taxpayer. The IRS will reimburse people who have already repaid any excess advance Premium Tax Credit on their 2020 tax return. Taxpayers who received a letter about a missing Form 8962 should disregard the letter if they have excess APTC for 2020. The IRS will process tax returns without Form 8962 for tax year 2020 by reducing the excess advance premium tax credit repayment amount to zero.
Taxpayers with excess (APTC) for 2020 don’t have to file Form 8962 or report an excess advance Premium Tax Credit repayment on their 2020 Form 1040 or Form 1040-SR, Schedule 2, Line 2 when they file.
Eligible taxpayers may claim a Premium Tax Credit for health insurance coverage in a qualified health plan purchased through a Health Insurance Marketplace. Taxpayers can check with their tax professional or use tax software to figure the amount of allowable PTC and reconcile it with APTC received using the information from Form 1095-A, Health Insurance Marketplace Statement.
The process stays the same for taxpayers claiming a net Premium Tax Credit for 2020. They must file Form 8962 when they file their 2020 tax return. See the Instructions for Form 8962 for more information. Taxpayers claiming a net Premium Tax Credit should respond to an IRS notice asking for more information to finish processing their tax return.
This change only applies to reconciling tax year 2020 APTC. Taxpayers who received the benefit of APTC before 2020 must file Form 8962 to reconcile their APTC and Premium Tax Credit for the pre-2020 year when they file their federal income tax return even if they are not otherwise required to file a tax return for that year.
See Form 8962, Premium Tax Credit and Fact Sheet 2021-08, More details about changes for taxpayers who received advance payments of the 2020 Premium Tax Credit.
