Premium Tax Credit FAQs Updated

The Internal Revenue Service has published a new set of frequently asked questions on the Premium Tax Credit, giving taxpayers the latest and best information on how—and why—to claim the credit.

Start with the basics

The Premium Tax Credit is aimed at low- or moderate-income taxpayers and families who may not be able to afford health insurance that is sold through the Health Insurance Marketplace (also known as the Exchange).

Credit amounts are based on a sliding scale: the lower the income of the qualifying taxpayer, the higher the credit amount available to help cover the cost of their health insurance.

When taxpayers sign up for health insurance through the Marketplace, they can choose to have the Marketplace figure an estimated credit, which will be paid to the insurance company directly to lower what the taxpayer has to pay for their monthly health care premiums.

The taxpayer has the option to have these advance payments made for them by the Marketplace. If that’s the case, the taxpayer will have to reconcile the amount of advance credit they got with the actual credit amount when they file their tax return for the year.

Whether or not direct payments were authorized, the taxpayer fills out Form 8962, Premium Tax Credit (PTC) and sends it to the IRS with their income tax return.

The Premium Tax Credit is refundable, which means the taxpayer can receive the difference between the amount of the credit and their tax due as a refund. Even if the taxpayer doesn’t owe any tax, they may still qualify to get the entire credit amount refunded.

Updating the FAQs

The IRS has published the updated frequently asked questions surrounding the Premium Tax Credit in Fact Sheet 2022-13, found on the IRS website.

The new and improved FAQs include:

  • Updated The Basics FAQs: Q1, Q3, Q4
  • Updated Eligibility FAQs: Q5, Q7, Q8, Q9, Q11
  • Updated Reporting, Claiming and Reconciling FAQs: Q24, Q26, Q27
  • Updated Suspension of Repayment of Excess Advance Payments of the Premium Tax Credit (Excess APTC) for Tax Year 2020 FAQs: Q33, Q36
  • New Unemployment Compensation 2020 and 2021 FAQs: Q38 through Q45

The IRS reminds that frequently asked questions are their vehicle to deliver the updated information quickly to taxpayers, but should not be relied upon for legal advice before such bodies as the Tax Court.

More information about such reliance is available.

Sources: IR-2022-44; FS-2022-13

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