Net Premium Tax Credit

[Janitor Bob]

This does not seem right:

 

Client qualified for a Premium tax credit of $1,848.  She obtained insurance through the marketplace for 6 months of 2014....using $138 of the advance premium tax credit each month for a total of $828.  Even though client chose to not keep the coverage all year, she still gets the unused portion of the tax credit ($1,020) added to her refund?

 

seems like a money-making scheme to me...am I doing something wrong?

[Pacun]

She will get a penalty of at least $42.50 and you have to make sure that you checking only the months that she was covered in order to get the credit.

 

Make sure you don't check on top "all year" and do not enter the total on top... you must enter each month on the bottom of the form.

[Abby Normal]

Did you leave the rows blank for the months client was not covered?

They do get the excess of col E over col F but only for the covered months.

[Janitor Bob]

She was not covered Jan & Feb.  I checked the boxes for exemption for those two months (Code G for beginning of year gap in coverage) on the 8965.  She was covered through the Marketplace March-August, then no coverage (no exemption) Sept -Dec.  She did get a $32 penalty.  I completed the information for each month on the 8962 (leaving the annual totals line 11 blank and answering "No" for line 10).  This kept generating a refundable premium tax credit

 

I guess its right....monthly premium for SLCSP is $375.  Client's monthly contribution amount is $67.  The difference each month would be her premium tax credit allowed of $308 (x 6 months coverage = $1848).  Her monthly Advance Payment was $138 (x6 =$828)...so I guess the difference of $1,020 is her Net Premium tax credit.

 

She must have over-estimated her income when she applied through the marketplace.

[Abby Normal]

Yeah I had a winner yesterday that got another 1,000 back. First year Sch C so they did a good job of guesstimating their income on the high side.

[Jack from Ohio]

Keep in mind that there are 800,000 1095-A forms out with wrong information on them.

[Janitor Bob]

Thanks for the reminder Jack.  I have informed that client of the situation...waiting to hear from her if hers was one of them.

[Jack from Ohio]

I understand that the taxpayer can log into their account on the marketplace website and it will tell them if theirs is one of the affected.  I have not verified this, but may be worth having them check.

[jklcpa]

Logging in to the marketplace does work.  The person must log in to the marketplace and open the 2014 application and from there must click on "Tax Forms" that is the last choice in the list at left.  If the 1095-A is wrong, the person will see a big red box with the warning that the form as issued has the incorrect figures for the SLCSP on it.  The figures on the incorrect ones are the 2015 amount and should be the 2014 amounts.  The taxpayer may have already received an email also if his/her 1095-A is one with the error.

 

If your client hasn't been notified and wants to check, or the preparer wants to confirm that the 1095-A has the correct SLCSP amounts is to use the tool on the Marketplace to recheck the form based on the age(s) of those insured.  Be sure to enter the age(s) at the time of application, not the age attained during the year. Example, if the person's age was 45 on 1/1/14 when the policy started and their 46th birthday wasn't until March, enter 45 into the calculator to see the correct SLCSP.  If that same person's coverage didn't start until July, then enter age 46.  

 

This is the tool on the Marketplace to recheck the SLCSP for 2014 and that handles multiple persons covered under one policy, or use this tool on the govt's HHS site that is for one individual (if a married couple, you'd have to add the two together).  I've verified one already, and got the same figures from both sites.