What Is IRS Form 8962: Premium Tax Credit?

Form 8962 is used to calculate the amount of premium tax credit you’re eligible to claim if you paid premiums for health insurance purchased through the Health Insurance Marketplace. Claiming the premium tax credit could reduce your tax liability for the year. Completing Form 8962 can tell you how much credit you’re eligible to receive or whether you owe the Internal Revenue Service (IRS) because you received too much in advance premium tax credit (APTC)—though, for the tax year 2020, reporting and repayment of excess credits has been suspended.

Key Takeaways

  • Form 8962 is used to estimate the amount of premium tax credit for which you’re eligible if you’re insured through the Health Insurance Marketplace.
  • You need to complete Form 8962 if you wish to claim a premium tax credit on your tax return, or you received advance payments of premium tax credits during the year.
  • Form 8962 is used along with Form 1095-A, which your local health marketplace should send you.
  • Form 8962 to reconcile the difference between the amount of advanced premium tax credit you received and the amount of premium tax credit you’re eligible to receive—and determines whether or not you owe money to the IRS.
  • For the tax year 2020, those receiving excess advance premium tax credits do not need to reimburse the IRS and don't need to file Form 8962.

Who Can File IRS Form 8962: Premium Tax Credit?

You only need to complete IRS Form 8962 if you purchased health insurance through the Affordable Care Act’s Health Insurance Marketplace. If you’re covered by a health insurance plan at work or you purchased health insurance directly from an insurance company outside of the exchange, you don’t need this form to complete your tax filing.

If you received a Form 1095-B from your insurance company or a Form 1095-C from your employer, you don’t file Form 8962.

Customarily, you must fill out and file Form 8962 if:

  • You paid your health insurance premiums out of pocket, and now want to claim the premium tax credit, or
  • Advance premium tax credits were paid for you or a family member covered by your plan

However, for the tax year 2020, the IRS has decreed you are not required to file Form 8962 if it turns out you have excess advance premium tax credits.

If you enrolled for health insurance through the Marketplace and received a Form 1095-A, you will use it to complete Form 8962. This form, called a Health Insurance Marketplace Statement, has information about your coverage, including:

  • Premiums paid
  • Premium tax credits used
  • Who is covered under your plan

Form 1095-A is issued to you by the Marketplace, not the IRS. If you don’t get one in the mail, you should be able to view your form by logging into your Marketplace account online.

You may receive more than one Form 1095-A for the year if you changed Marketplace health insurance plans, added or removed family members from your coverage, or have more than five family members enrolled on the same plan.

What Is Form 8962: Premium Tax Credit Used for?

Advance premium credits are paid directly to your health insurance plan provider, reducing your monthly premium payments. Form 8962 is used along with Form 1095-A to reconcile the difference between the amount of advanced premium tax credit you received and the amount of premium tax credit you’re eligible to receive, which is based on your income for the year.

This calculation matters because it determines whether or not you owe money to the IRS. If the amount of advanced premium tax credit received is less than the amount of the premium tax credit you’re eligible to receive, then you’re owed the difference. On the other hand, if the amount of advanced premium tax credit received exceeds the amount of the premium tax credit you’re eligible to claim, you owe money back to the IRS. The sum you owe could either reduce the size of your overall tax refund or mean that you have to pay money to the IRS.

The American Rescue Plan, enacted on March 11, 2021, suspended repayments of excess APTC issued in 2020. The IRS is taking steps to reimburse people who filed Form 8962, reported, and made an excess advance Premium Tax Credit repayment amount with their 2020 tax return before the legislation was passed.

The American Rescue Plan of 2021 also reduces the cost of Marketplace plans, increases the tax credits for many Americans, and expands eligibility for the tax credits starting April 1, 2021. The average Marketplace user will pay $85 less per policy every month.

Form 8962 is also used to claim what is called "net Premium Tax Credits". These apply to eligible individuals who can elect to pay their insurance premiums out-of-pocket throughout the year, and then claim the PTC at the end of the tax year, instead of benefitting from an APTC.

How to Read and Fill Out Form 8962: Premium Tax Credit

IRS Form 8962

Form 8962 is a two-page form broken into five parts.

Part I is where you record annual and monthly contribution amounts using your family size, modified adjusted gross income, and household income.

Part II is where you reconcile your advanced premium tax credit received with monthly premium amounts.

Part III is used to calculate any excess advanced premium tax credit payments, based on the information you provided in Part II.

Part IV allows you to allocate policy amounts, while Part V is used for alternative calculation of your year of marriage.

Again, you need Form 1095-A to complete each section of the form, as well as your Form 1040 showing your modified adjusted gross income.

If the information on your Form 1095-A is wrong, you need to have it corrected before completing Form 8962. You can request an updated form by contacting the Health Insurance Marketplace.

Download Form 8962: Premium Tax Credit Here

Form 8962 is available on the IRS website and is free to download. If you’re filing taxes using electronic tax filing software, this form should be generated for you as you navigate through the program’s questionnaire format.

Can Form 8962 Be E-Filed?

E-filing can be convenient and take less time than completing paper tax forms. If you’re e-filing your taxes, you should be able to complete Form 8962 through the tax filing software program you’re using.

Where to Mail Form 8962

If you’re filling out a paper tax return and mailing your forms to the IRS, you include Form 8962 with your Form 1040. You then mail your forms to the IRS regional office that covers your state of residence. The IRS offers a helpful table that breaks down where to send your Form 1040 and any accompanying forms, such as Form 8962, on its website.

The Bottom Line

If you are getting health insurance through the Marketplace and qualify for Premium Tax Credits (PTC), you must file Form 8962 with your tax return—whether you receive an Advance PTC or claim a PTC at year-end. You fill it out with the help of a Health Insurance Marketplace Statement (Form 1095-A), which should be sent to you by your local health exchange.