What is Form 8962, Premium Tax Credit (PTC)?

What is Form 8962, Premium Tax Credit (PTC)?

Internal Revenue Service (IRS) Form 8962 is the tax form you use to calculate your actual premium tax credit and reconcile it with any advance payments you received during the year. Don’t worry. Your accountant and most online tax filing services like TurboTax will walk you through this.

How the premium tax credit works

The premium tax credit is a tax credit that offsets your annual health insurance premiums. It’s a way for the government to pay for some or all of your private health insurance costs. 

One unique feature of the premium tax credit is that it’s advanceable. Advanceable means you can receive an estimated tax credit before you file your tax return. You don’t have to take your premium tax credit in advance, but most people choose to. 

When you accept the premium tax credit in advance, it’s an estimate based on an annual income estimate you provide to the Marketplace as part of your application. The IRS then reconciles your estimated premium tax credit with your actual income when you file your tax return the following year. If you elect not to receive it upfront, you’ll receive whatever amount you qualify for in the form of a refund when you file your tax return the following year.

Form 8962 only applies if you have Marketplace coverage

The premium tax credit is only available for individual and family coverage purchased through your state’s Health Insurance Marketplace. Therefore, you should only complete Form 8962 if you or a family member had Marketplace coverage at some point during the tax year.

Each year, the Marketplace generates a “Health Insurance Marketplace Statement” called a 1095-A for you to use when you file your tax return. The Marketplace also sends a copy to the IRS. Think of the 1095-A as a special kind of W-2 or 1099. It’s a way for the Marketplace to report information about your health insurance plan and any premium tax credits you receive to the IRS for tax purposes.

You must file Form 8962 with your tax return if any of the following apply:

  • You want to receive the premium tax credit.
  • You or a member of your household received any premium tax credit in advance.

The IRS provides instructions on how to fill out Form 8962 on its website.

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