IR-2021-84, April 9, 2021 WASHINGTON– The American Rescue Plan Act of 2021 suspends the requirement that taxpayers increase their tax liability by all or a part of their excess advance payments of the Premium Tax Credit (excess APTC) for tax year 2020. A taxpayer’s excess APTC is the quantity by which the taxpayer’s advance payments of the Premium Tax Credit (APTC) surpass his/her Premium Tax Credit (PTC).
The Internal Revenue Service revealed today that taxpayers with excess APTC for 2020 are not needed to submit Form 8962, Premium Tax Credit, or report an excess advance Premium Tax Credit payment on their 2020 Form 1040 or Form 1040-SR, Schedule 2, Line 2, when they submit.
Qualified taxpayers might declare a PTC for medical insurance coverage in a certified health insurance bought through a Health Insurance Marketplace. Taxpayers utilize Form 8962, Premium Tax Credit to figure the quantity of their PTC and reconcile it with their APTC. This calculation lets taxpayers understand whether they need to increase their tax liability by all or a part of their excess APTC, called an excess advance Premium Tax Credit payment, or might declare a net PTC.
Taxpayers can talk to their tax expert or utilize tax software application to figure the quantity of allowed PTC and reconcile it with APTC gotten utilizing the details from Form 1095-A, Health Insurance Marketplace Statement.
The procedure stays the same for taxpayers declaring a net PTC for 2020. When they submit their 2020 tax return, they need to submit Form 8962. See the Instructions for Form 8962 for additional information. Taxpayers declaring a net PTC must react to an IRS notification requesting for more details to complete processing their income tax return.
Taxpayers who have actually currently submitted their 2020 income tax return and who have excess APTC for 2020 do not require to submit a modified income tax return or call the IRS. The IRS will lower the excess APTC payment total up to absolutely no without any more action required by the taxpayer. The IRS will compensate individuals who have actually currently paid back any excess advance Premium Tax Credit on their 2020 income tax return. If they have excess APTC for 2020, taxpayers who got a letter about a missing Form 8962 need to overlook the letter. The IRS will process income tax return without Form 8962 for tax year 2020 by decreasing the excess advance premium tax credit payment total up to absolutely no.
Once again, IRS is taking actions to repay individuals who submitted Form 8962, reported, and paid an excess advance Premium Tax Credit payment quantity with their 2020 income tax return prior to the current legal modifications were made. Taxpayers in this scenario ought to not submit a modified return entirely to get a refund of this quantity. The IRS will supply more information on IRS.gov. There is no requirement to submit a modified income tax return or call the IRS.
As a pointer, this modification uses just to fixing up tax year 2020 APTC. Taxpayers who got the advantage of APTC prior to 2020 should submit Form 8962 to reconcile their APTC and PTC for the pre-2020 year when they submit their federal tax return even if they otherwise are not needed to submit an income tax return for that year. The IRS continues to process previous year income tax return and correspond for missing out on details. We require more info from the taxpayer to end up processing their tax return if the IRS sends out a letter about a 2019 Form 8962. Taxpayers need to react to the letter so that the IRS can complete processing the income tax return and, if appropriate, provide any refund the taxpayer might be due.
Initial Source: https://www.irs.gov/newsroom/irs-suspends-requirement-to-repay-excess-advance-payments-of-the-2020-premium-tax-credit-those-claiming-net-premium-tax-credit-must-file-form-8962