Why do I have to pay back my premium tax credit?
Asked by: Katlynn Sauer DVM | Last update: December 21, 2025Score: 4.5/5 (3 votes)
Why do I owe money to premium tax credit?
Most people only have to pay back a portion of the extra because of limits on payback... If you over-estimated your income in advance and got less premium tax credits than you deserved, then you get the extra amount that you are owed.
How can I avoid paying back my premium tax credit?
The only way to reduce your APTC (Advanced Premium Tax Credit) repayment is to reduce your AGI, and the only way to do that after the tax year is over (ie, now), for most folks is to make a deductible contribution to a traditional IRA or make a contribution to an HSA for tax year 2023.
How does the premium tax credit affect my tax return?
Claiming a net PTC will lower the amount of tax you owe or increase your refund to the extent it is more than the amount of tax you owe. See the Coronavirus tax relief section on this page for information specific to tax year 2020.
Do you have to pay the tax credit back?
If you qualify for a “refundable” tax credit, you'll receive the entire amount of the credit. If the credit exceeds the tax you owe, you'll receive the remaining amount as a tax refund. Even if you owe no taxes, you can apply for and receive a refundable tax credit.
Health Insurance Subsidy Tax Credit or Repayment
Why do I owe taxes for health insurance?
Owe taxes if you used more of the premium tax credit than you qualified for in 2024. You'll have to report the excess amount on your 2024 tax return by filing Form 8962, Premium Tax Credit (PDF, 115 KB). Find instructions for Form 8962 (PDF, 348 KB).
What happens if you don't use all of your premium tax credit?
If you didn't receive all of the premium tax credit you're entitled to during the year, you can claim the difference when you file your tax return. If you're uncertain about your income for the coming year, remember that you can modify the amount of premium tax credit during the year if your income changes.
What happens if I don't report my 1095-A?
You can use Form 1095-A to reconcile any advance premium tax credits you received during the year with the amount of credits you were eligible to receive. If you fail to file a tax return reconciling those payments, you will not be eligible for premium tax subsidies in the next year.
Is premium tax credit a loan?
The Premium Tax Credit—also known as PTC—is a refundable credit that helps eligible individuals and families cover the premiums for their health insurance purchased through the federal government's health insurance marketplace.
Why is my premium tax credit so high?
The amount of the tax credit you may receive depends on your income and the cost of Marketplace health plans in your area. The Marketplace will determine the expected contribution you are required to pay toward the premium for a mid-range (Silver) benchmark plan.
What happens if I underestimate my income for Obamacare in 2024?
For the 2024 tax year, if you underestimated your income and received a larger tax credit than you were eligible for, you must repay the difference between the amount of premium tax credit you received and the amount you were eligible for.
What happens if you don't reconcile your premium tax credit?
If you don't reconcile, you won't be eligible for advance payments of the premium tax credit or cost-sharing reductions to help pay for your Marketplace health insurance coverage for the following calendar year.
What happens if I overestimate my income for marketplace insurance?
If you overestimate your income and end up claiming less help than you are entitled to, the difference will be refunded to you when you file your income taxes the following year.
How do I adjust my premium tax credit?
Fill out Form 8962 to "reconcile"
Use the information from your 1095-A to fill out Form 8962, Premium Tax Credit. Use IRS Form 8962 to find out if you used the right amount of premium tax credit during the year. Use the form to compare the advance amount you use to the amount you qualify for based on your final income.
Do you have to pay back healthcare subsidies?
The federal government offers two types of subsidies to make health insurance more affordable for individuals and families who qualify. It is important to know that a subsidy is not a loan; you will not have to pay it back. A subsidy is just assistance to pay for your health care.
Do I have to pay back 1095a?
If your actual income was lower than what you estimated, you can claim the difference as a refund when you file your tax return. If your income was higher than what you estimated, you might have to pay back some or all of the difference when you file your return.
Does the IRS know if I had health insurance?
The Department of Health Care Services (DHCS) is required by state and federal law to send Form 1095-B information to the IRS and FTB for the purpose of validating months of health coverage reported by the person filing their state and/or federal taxes.
Can I file my taxes without my 1095 yet?
Some taxpayers may not receive a Form 1095-B or Form 1095-C by the time they are ready to file their tax return. While the information on these forms may assist in preparing a return, they are not required. Individual taxpayers should not wait for these forms and file their returns as they normally would.
Why do I have to repay premium tax credit?
If at the end of the year you've taken more premium tax credit in advance than you're due based on your final income, you'll have to pay back the excess when you file your federal tax return. If you've taken less than you qualify for, you'll get the difference back.
What is the highest income to qualify for ACA?
In 2025, you'll typically be eligible for ACA subsidies if you earn between $15,060 and $60,240 as a single person. A family of four is eligible with a household income between $31,200 and $124,800.
Do you have to pay tax credits back?
Tax credits are amounts you subtract from your bottom-line tax due when you file your tax return. Most tax credits can reduce your tax only until it reaches $0. Refundable credits go beyond that to give you any remaining credit as a refund. That's why it's best to file taxes even if you don't have to.
Why is my 1095-A making me owe taxes?
If you filed and incorrectly claimed a premium tax credit based on these forms, and you do not amend your return, the IRS may contact you about additional tax due.
Do you get a tax refund for health insurance?
The premium tax credit – also known as PTC – is a refundable credit that helps eligible individuals and families cover the premiums for their health insurance purchased through the Health Insurance Marketplace.
What disqualifies you from the premium tax credit?
For tax years other than 2021 and 2022, if your household income on your tax return is more than 400 percent of the federal poverty line for your family size, you are not allowed a premium tax credit and will have to repay all of the advance credit payments made on behalf of you and your tax family members.