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Publication 974, Premium Tax Credit (PTC)

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Userid: CPM Schema: tipx Leadpct: 100% Pt. size: 10 Draft Ok to Print AH XSL/XML Fileid: … tions/P974/2020/A/XML/Cycle04/source (Init. & Date) _______ Page 1 of 80 16:23 - 16-Apr-2021 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. Department of the Treasury Contents Internal Revenue Service Future Developments ....................... 1 Publication 974 Reminders ............................... 2 Cat. No. 66452Q Introduction .............................. 2 What Is the Premium Tax Credit (PTC)? ......... 3 Premium Tax Who Must File Form 8962 .................... 3 Who Can Take the PTC ...................... 4 Credit (PTC) Terms You May Need To Know ............... 4 For use in preparing Minimum Essential Coverage (MEC) ........... 8 Individuals Not Lawfully Present in the United 2020 Returns States Enrolled in a Qualified Health Plan ... 19 Determining the Premium for the Applicable Second Lowest Cost Silver Plan (SLCSP) ... 27 Allocating Policy Amounts for Individuals With No One in Their Tax Family .............. 27 Allocation of Policy Amounts Among Three or More Taxpayers ....................... 28 Alternative Calculation for Year of Marriage .... 38 Self-Employed Health Insurance Deduction and PTC ............................. 57 How To Get Tax Help ...................... 76 Index .................................. 80 Future Developments For the latest information about developments related to Pub. 974, such as legislation enacted after it was published, go to IRS.gov/Pub974. What’s New Health reimbursement arrangements (HRAs). Begin- ning in 2020, employers can offer individual coverage health reimbursement arrangements (individual coverage HRAs) to help employees and their families with their medical expenses. If you are offered an individual cover- age HRA, see Individual Coverage HRAs, later for more information on whether you can claim a PTC for you or a member of your family for Marketplace coverage. Suspension of repayment of excess APTC for 2020. The American Rescue Plan Act of 2021 suspended the re- payment of excess advanced PTC (APTC) amounts for tax year 2020. Get forms and other information faster and easier at: • IRS.gov (English) • IRS.gov/Korean (한국어) • IRS.gov/Spanish (Español) • IRS.gov/Russian (Pусский) • IRS.gov/Chinese (中文) • IRS.gov/Vietnamese (Tiếng Việt) Apr 16, 2021 Page 2 of 80 Fileid: … tions/P974/2020/A/XML/Cycle04/source 16:23 - 16-Apr-2021 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. For more information on how to report a change in Reminders circumstances to the Marketplace, visit HealthCare.gov or your State Marketplace website. Qualified small employer health reimbursement ar- Health coverage tax credit (HCTC). The HCTC is a tax rangement (QSEHRA). Under a QSEHRA, an eligible credit that is calculated based on a percentage of health employer can reimburse eligible employees for medical insurance premiums for coverage of eligible taxpayers expenses, including premiums for Marketplace health in- and their qualifying family members. The HCTC and the surance. If you were provided a QSEHRA, your employer PTC are different tax credits that have different eligibility should have reported the annual permitted benefit in rules. If you think you may be eligible for the HCTC, see box 12 of your Form W-2 with code FF. If the QSEHRA is Form 8885 and its instructions or visit IRS.gov/HCTC be- considered affordable coverage for a month, no premium fore completing Form 8962. tax credit (PTC) is allowed for the month. If the QSEHRA is not considered affordable coverage for a month, you Health insurance options. If you need health coverage, may still be eligible for the PTC but you must reduce the visit HealthCare.gov to learn about health insurance op- monthly PTC (but not below -0-) by the monthly permitted tions that are available for you and your family, how to pur- benefit amount. For more information, see Qualified Small chase health insurance, and how you might qualify to get Employer Health Reimbursement Arrangement, later. financial assistance with the cost of insurance. Requirement to reconcile advance payments of the Additional information. For additional information about premium tax credit. If you, your spouse with whom you the tax provisions of the Affordable Care Act (ACA), in- are filing a joint return, or a dependent was enrolled in cluding the individual shared responsibility provisions and coverage through the Marketplace for 2020 and advance the PTC, see IRS.gov/Affordable-Care-Act/Individuals- payments of the premium tax credit (APTC) were made and-Families or call the IRS Healthcare Hotline for ACA for this coverage, you must file a 2020 return and attach questions (800-919-0452). Form 8962 to claim a net PTC. You (or whoever enrolled you) should have received Form 1095-A, Health Insur- Photographs of missing children. The Internal Reve- ance Marketplace Statement, from the Marketplace with nue Service is a proud partner with the National Center for information about your coverage and any APTC. You Missing & Exploited Children® (NCMEC). Photographs of must attach Form 8962 even if someone else enrolled missing children selected by the Center may appear in you, your spouse, or your dependent. If you are a depend- this publication on pages that would otherwise be blank. ent who is claimed on someone else's 2020 return, you do You can help bring these children home by looking at the not have to attach Form 8962. photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. The requirement to repay your excess APTC for ! 2020 has been suspended. If you have excess CAUTION APTC for 2020, you are not required to file Form 8962 or to repay your excess APTC. Introduction Report changes in circumstances when you re-enroll This publication covers the following general topics, relat- in coverage and during the year. If APTC is being paid ing to the premium tax credit (PTC), which are also cov- for an individual in your tax family (defined later) and you ered in the Form 8962 instructions. have had certain changes in circumstances (see the ex- • What is the PTC? amples below), it is important that you report them to the Marketplace where you enrolled in coverage. Reporting • Who must file Form 8962. changes in circumstances promptly will allow the Market- • Who can take the PTC. (See Figure A—Can You Take place to adjust your APTC to reflect the PTC you are esti- the PTC, later.) mated to be able to take on your tax return. Adjusting your This publication also provides additional instructions for APTC when you re-enroll in coverage and during the year taxpayers in the following special situations. can help you avoid receiving excess APTC. Changes that you should report to the Marketplace include the follow- • Taxpayers who take the PTC and who are filing a sep- ing. arate return from their spouses because of domestic abuse or spousal abandonment. • Changes in household income. Taxpayers who take the PTC and who are also provi- • Moving to a different address. • ded a QSEHRA. • Gaining or losing eligibility for other health care cover- Taxpayers who need to calculate the PTC and APTC age. • for a policy that covered an individual not lawfully • Gaining, losing, or other changes to employment. present in the United States. • Birth or adoption. • Taxpayers who need to determine the applicable sec- • Marriage or divorce. ond lowest cost silver plan (SLCSP) premium. • Other changes affecting the composition of your tax • Taxpayers who need to allocate policy amounts for in- family. dividuals not included in any tax family. Page 2 Publication 974 (2020) Page 3 of 80 Fileid: … tions/P974/2020/A/XML/Cycle04/source 16:23 - 16-Apr-2021 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. • Taxpayers who need to allocate policy amounts be- Form (and Instructions) cause one qualified health plan covers individuals 1095-A 1095-A Health Insurance Marketplace Statement from three or more tax families in the same month. 1095-B 1095-B Health Coverage • Taxpayers who married during the tax year and want to use an alternative PTC calculation that may lower 1095-C 1095-C Employer-Provided Health Insurance Offer their taxes. and Coverage • Self-employed taxpayers who wish to take the PTC 8885 8885 Health Coverage Tax Credit and the self-employed health insurance deduction. 8962 8962 Premium Tax Credit (PTC) This publication also provides additional information to help you determine if your health care coverage is mini- See How To Get Tax Help, near the end of this publica- mum essential coverage (MEC). tion, for information about getting publications and forms. Comments and suggestions. We welcome your com- ments about this publication and suggestions for future What Is the Premium Tax editions. You can send us comments through IRS.gov/ Credit (PTC)? FormComments. Or, you can write to the Internal Reve- nue Service, Tax Forms and Publications, 1111 Constitu- Premium tax credit (PTC). The PTC is a tax credit for tion Ave. NW, IR-6526, Washington, DC 20224. certain people who enroll, or whose family member en- Although we can’t respond individually to each com- rolls, in a qualified health plan offered through a Market- ment received, we do appreciate your feedback and will place. The credit provides financial assistance to pay the consider your comments and suggestions as we revise premiums for the qualified health plan by reducing the our tax forms, instructions, and publications. Do not send amount of tax you owe, giving you a refund, or increasing tax questions, tax returns, or payments to the above ad- your refund amount. You must file Form 8962 to compute dress. and take the PTC on your tax return. Getting answers to your tax questions.
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