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To be eligible for the premium tax credit, your household income must be at least 100 – but no more than 400 – percent of the federal poverty line for your family size, although there are two exceptions for individuals with household income below 100 percent of the applicable federal poverty line. Remember that simply meeting the income requirements does not mean you’re eligible for the premium tax credit. You must also meet the other eligibility criteria.
Here are four things to remember about how your income affects your premium tax credit:
The amount of the premium tax credit is based on a sliding scale, with greater credit amounts available to those with lower incomes.
If the advance credit payments made on your behalf are more than the allowed premium tax credit, you will have to repay some or all the excess. If your household income is 400 percent or more of the federal poverty line for your family size, you will have to repay all of your excess advance credit payments.
If your projected household income is close to the 400 percent upper limit, be sure to carefully consider the amount of advance credit payments you choose to have paid on your behalf.
If your household income on your tax return is more than 400 percent of the federal poverty line for your family size, you are not allowed a premium tax credit and will have to repay all of the advance credit payments made on behalf of you and your tax family members.
See the Instructions for Form 8962, Premium Tax Credit, for information about the federal poverty guidelines for purposes of claiming the premium tax credit.
The federal poverty guidelines are sometimes referred to as the “federal poverty line” or FPL. The Department of Health & Human Services determines the federal poverty guideline amounts annually.
HHS provides three federal poverty guidelines: one for residents of the 48 contiguous states and Washington D.C., one for Alaska residents, and one for Hawaii residents. For purposes of the premium tax credit, eligibility for a certain year is based on the most recently published set of poverty guidelines at the time of the first day of the annual open enrollment period for coverage for that year.
Other Criteria
Aside from your income, there are other factors that affect the credit amount, including:
Cost of available insurance coverage
Where you live
Your address
Your family size
Married Filing Separately
If you are married and you file your tax return using the filing status married filing separately, you will not be eligible for the premium tax credit unless you are a victim of domestic abuse and spousal abandonment and can meet certain criteria. Details regarding this relief are in the instructions for Form 8962 and Publication 974.
Generally, a taxpayer who lives apart from his or her spouse for the last six months of the tax year is considered unmarried if the taxpayer files a separate return, maintains a household that is also the main home of the taxpayer’s dependent child for more than half the year, and furnishes more than half the cost of the household during the tax year.
For help in finding out if you are eligible for the premium tax credit, check out the Premium Tax Credit Flow Chart or through the accessible text. Answering a few yes-or-no questions can help you determine if you might be eligible for the credit.
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