Premium Tax Credit is a form of financial assistance that is available to certain individuals and families who purchase health insurance through the Health Insurance Marketplace. This credit can lower the amount of taxes you owe and increase your refund amount if you qualify. Understanding the eligibility requirements for claiming the PTC is essential to ensure you get the most out of your health insurance plan.
Eligibility Requirements
In order to qualify to receive the premium tax credit, a taxpayer must fulfill the necessary qualification.
Income Requirements
To be qualified to claim the (PTC) to your federal tax return, your household income must be within a certain range. The range is between 100 percent and 400 percent of the Federal Poverty Level (FPL) for the specific size of your family. Your tax deduction amount may differ depending on the number of people in your household and where you file your taxes.
Citizenship/Residency Requirements
In order to qualify, individuals must have U.S. citizenship, national status, or be lawfully present in the United States. Individuals must present documentation like their Social Security number, alien registration number, or an I-94 form that demonstrates their approved immigration status.
Individuals residing outside of the United States may be eligible to receive the Premium Tax Credit if they submit a U.S. income tax return and declare a residential address within the United States.
Marketplace Coverage Requirements
In order to be eligible for the (PTC), you should have an insurance plan through the Health Insurance Marketplace. Furthermore, you must acquire the policy through the Marketplace and not from your insurance provider directly. This is the only way to guarantee you receive the credit.
Tax Filing Status
To qualify, you must file your taxes jointly as an individual or married couple. If you are married and filing taxes separately, or are claimed as someone else’s dependent, such as a child or elderly parent, you are ineligible to receive the PTC.
Affordability
The premiums for your health insurance plan must meet the affordability standards established by the Marketplace. That means that the cost of the premium cannot exceed a certain percentage of your household income. The exact percentage depends on your household size and income level.
How to Obtain the Credit
You can make a request for PTC by following the steps below:
- Make sure you’re eligible for the PTC: You have to be signed up for medical coverage through the Health Insurance Exchange and have a family earning between 100 percent and 400 percent of the federal poverty index.
- Gather necessary documents: To assert the PTC, you will need your Form 1095-A, which you should have received in the mail from the Marketplace. You will also need other documents, such as proof of income, Social Security numbers, and the number of people in your household.
- Fill out IRS Form 8962: This form must be filled out. It will request information like the number of months you had insurance coverage, the total premiums paid, and the amount of the advance payments of the credit that you were given.
- File your taxes: Once you have completed Form 8962, you can file your taxes with the IRS. Make sure to include your completed Form 8962 in your annual tax return.
- Claim the PTC: Once you have filed your taxes, you can claim the PTC by completing Form 1040, Schedule 3. This form will ask for information such as the amount.
If you are having a hard time mastering these tax forms, check out Boom tax for details, including mastering form 1094-C.
Wrapping Up
The PTC is a valuable benefit to those who qualify. It can help reduce the cost of healthcare premiums, making healthcare more accessible and affordable. Understanding the eligibility requirements for claiming credit is vital to get the most out of your plan.
