Premium Tax Credit
The premium tax credit helps make your health insurance premiums more affordable. You’ll receive it as an advance credit or claim it as a refundable credit on your return. So, even if you owe little or no tax, you can still benefit from the credit.
To find out if you can claim the credit, you’ll need to look at your household income. If you do qualify, your household income will also determine the amount of credit you can claim.
Qualifying for the premium tax credit
- You must buy your health insurance from the federal or a state or regional marketplace.
- You must file a joint return with your spouse, if you’re married.
- Your household income must fall between 100% and 400% of the federal poverty level for your family size. Here are the income limits:
- Family of one — $11,670 up to $46,680
- Family of two — $15,730 up to $62,920
- Family of four — $23,850 up to $95,400
If you’re not sure if you qualify, visit www.healthcare.gov. You’ll be able to shop around for different plans and get an estimate of your premium tax credit. The last day to enroll for 2018 insurance is Feb. 15, 2018.
Advance premium tax credit
This credit is based on your estimated household income you provided when you signed up for marketplace insurance. It’s paid directly to your insurance provider every month and helps with the premium you pay out of pocket.
When you prepare your taxes, we’ll reconcile the advance paid to your insurance company. We’ll figure this with the amount of the premium tax credit you’re eligible for based on your actual household income.
So, if your actual premium tax credit was less than your advance, we’ll do one of these:
- Subtract the difference from your refund
- Add the difference to your balance due. Keep in mind that the difference is subject to certain caps.
However, if your premium tax credit is more than your advance, we’ll either:
- Add the difference to your refund
- Subtract the difference from your balance due
The easiest way to avoid having to pay back a credit is to update the marketplace when you have any life changes. Life changes can influence your estimated household income and your credit amount. So, the sooner you can update the marketplace, the better. This ensures you receive the correct amount. A life change includes:
- A marriage or divorce
- Having a baby, adopting a child, or placing a child for adoption or foster care
- A child on your policy turning 26 or a dependent changing status so they’re no longer your dependent
- The death of anyone in your household
- Changes to income
- An offer of job-based insurance coverage to anyone in your household, even if they don’t enroll in it
- Someone in your household getting coverage from a public program, like Medicaid, Children’s Health Insurance Program (CHIP), or Medicare
- A change to your permanent home address
If you receive the advance premium tax credit, you’ll need to file a return for the year, even if you don’t meet the threshold to file otherwise.
Can you claim your children for the Earned Income Tax Credit but not as dependents, so you ex-spouse can claim them as dependents? Get Tax Answers from H&R
Learn more about filing head of household and claiming the earned income tax credit with advice from the tax experts at H&R Block.
Learn more college student tax credits from the tax experts at H&R Block.
Learn more about the different credits that form the investment credit and get tax answers at H&R Block.