Premium Tax Credit Repayment
The premium tax credit repayment is when you pay the excess credit to the Internal Revenue Service. Those who received an advanced premium tax credit from the IRS must pay the agency any amount received in excess.
This is due to the nature of the tax credit as it has advanced payments. For example, if you received $100 monthly from the premium tax credit in advanced payments, but what you should be getting is $80, the excess amount must be repaid to the IRS. In this given example, the excess amount is equal to $240 during the whole tax year. You can either report the excess premium tax credit on your federal income tax return when you file it or file Form 8962, Premium Tax Credit. You’ll report it regardless, whether it’s on your tax return or Form 8962, make sure to report the premium tax credit you deserve and the amount received.
Excess Premium Tax Credit Waived
For 2024 taxes, the Internal Revenue Service waived excess premium tax credits. If you received an excess amount, you don’t need to do anything further. Keep filing your return and figure out whether you owe the IRS or deserve a refund. You simply won’t pay the excess amount received in premium tax credit advanced payments.
How to pay excess premium tax credit?
Rather than seeing the excess premium tax credit received as a separate payment, think of it as your tax liability. Because you are obligated to pay this amount, it’s not any different than your tax liability.
If you don’t have a tax liability to pay, the excess premium tax credit received will reduce your tax refund. If not, it will be added to your tax liability. However, depending on the excess premium tax credit received, you might end up owing the IRS even if you had no tax liability before it. Taxpayers with excess premium tax credit amount higher than their tax refund will have a tax liability to pay, thus, must make payments to the Internal Revenue Service. There are several ways you can pay taxes to the IRS. Check out your options to pay taxes online.
