IRS FAQs focusing on Premium Tax Credit Changes resulting from the APRA

Highlights

• What is the premium tax credit (PTC)?
• How do taxpayers know that APTC was paid for their coverage?
• What happens if you already filed your 2020 tax return?
• Who should file Form 8962 with the 2020 tax return?
• How is the net PTC claimed?

Earlier this month, on April 9, 2021, the Internal Revenue Service (IRS) addressed critical changes for taxpayers who received advance payments of the 2020 premium tax credit (PTC) due to the American Rescue Plan Act (ARPA). The fully released fact sheet containing FAQs is live on their website.

Understanding how these recent legislative changes for the PTC affects individuals, families, and 2020 tax returns is important. The fact sheet explains what taxpayers need to know about claiming a net premium tax credit (net PTC) and what to do if you have excess advance payments of the premium tax credit (APTC) for the 2020 tax year.

2020 Guidance

The ARPA suspends the requirement that taxpayers repay any excess APTC received for the 2020 tax year. 

A taxpayer’s excess APTC is the amount by which the taxpayer’s APTC exceeds the premium tax credit amount the taxpayer is actually entitled to, based on actual income for the year.

Additionally, the IRS recently announced for the 2020 tax year, taxpayers with excess APTC for 2020 are NOT required to file Form 8962, Premium Tax Credit, to reconcile their APTC with the amount of PTC they are entitled to claim for 2020. 

They should not:

• Report an excess APTC repayment on the 2020 Form 1040 or Form 1040-SR, Schedule 2, Line 2; or
• File Form 8962.

Eligible taxpayers claiming a net PTC must file Form 8962 when they file their 2020 tax return. If the taxpayer’s PTC calculated on the return is more than the APTC paid on the taxpayer’s behalf during the year, the difference is a net PTC.

Make sure to see Form 8962 and its instructions for additional information.

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