Premium Tax Credit

[M7047]

Client had the credit for the first half of the year and then got a better job. They notified the marketplace and stopped coverage immediately. Their insurance rep claims they can use the amount of income for the beginning of the year to still get the credit, I don't see anywhere that allows you to say which income was earned when, it's just annualized. Am I missing something? 

[Lion EA]

I don't think you're missing anything. I'm working on a gal who won at a casino in December, so is paying back all her 2022 premium tax credit. Annual, calendar year, tax year. Just computed how much of an Traditional IRA contribution could lower her income enough to limit her payback. In her case, if she doesn't have money to pay the tax, she definitely doesn't have money to lock up into an IRA. Presenting her the results today. It's her decision what to do next.

Anybody out there know of something we need to know?

I have a vague memory of something about -- if you honestly thought you qualified when you applied, there's some exception to the payback. In these two cases, the taxpayer actually did qualify when they applied.

I have almost no clients in the marketplace, and probably only this gal receiving advanced premium tax credit, so I'm not very familiar with where to look for help.

[kathyc2]

It's based on annual income. 

45 minutes ago, Lion EA said:

I have a vague memory of something about -- if you honestly thought you qualified when you applied, there's some exception to the payback. In these two cases, the taxpayer actually did qualify when they applied.

If AGI is below 400% FPL there is a flat dollar limit on amount that needs to be paid back. 

 

[Lee B]

The taxpayer is required to notify the Marketplace of any change in circumstances.

[M7047]

33 minutes ago, cbslee said:

The taxpayer is required to notify the Marketplace of any change in circumstances.

They did. The problem lies with, the first half of the year their income was less and they qualified. Once he got a new job they didn't qualify. He notified them, but with the annualized income, it disqualifies them for the whole year. 

 

It's a shame there's no way to input they only received the help when needed and then stopped. They're going to be paying back what they got.

[TexTaxToo]

There's an exception if you fall out on the low end, that is, if you don't qualify because income is less than 100% FPL and you should be on Medicaid, but you thought you would qualify when you applied.

There's no exception on the high end, except for the limit on payback when < 400% FPL

[Randall]

I have a client who sold a rental house at a big gain.  Whoops.  Had to pay back all $12k of the PTC (plus tax on the gain).  He's only a year away from Medicare.  But he didn't have a mortgage so he's got all the money from the sale on hand.