The Advance Premium Tax Credit or Advanced Premium Tax Credit (APTC) is a federal tax credit with which you can reduce the amount you pay for monthly health insurance premiums.
Understanding the Advanced Premium Tax Credit (APTC)
The Advanced Premium Tax Credit (APTC) It is a credit of the Patient Protection and Affordable Care Act (ACA, also known colloquially as Obamacare), signed on March 23, 2010 by President Barack Obama.
Unlike other similar benefits, the Advanced Premium Tax Credit (APTC) it is calculated and sent directly by the government to the health insurance companies that insure people who are entitled to the credit.
The beneficiary of the Advanced Premium Tax Credit (APTC) obtains a discount on monthly premium payments for the amount of the tax credit. Anyone eligible for this tax credit receives an amount determined by their income.
Higher earners will receive a lower credit and lower monthly discount, while lower earners will receive higher credits and a higher discount on health care premiums. Because this tax credit is a direct payment, recipients do not have to pay the full amount of their monthly health insurance premium in advance, they will only have to pay the difference, after the discount.
Taxpayers get a discount on monthly premium payments for the amount corresponding to the tax credit.
The requirements to obtain Advanced Premium Tax Credit (APTC) they are several. On the one hand, the person requesting the credit must not be eligible for Medicaid or the Children’s Health Insurance Program (CHIP), on the other hand you also must not be eligible for employer-sponsored health insurance and finally your modified adjusted gross income (AGI) must be between 100 and 400 percent of the federal poverty level.
How to apply for the Advanced Premium Tax Credit (APTC)
To apply for the Advanced Premium Tax Credit (APTC), you must first purchase some health insurance coverage available in the Marketplace.
The tax credit is not automatic, this means that you must request it when you make the purchase of health insurance. If you do it on the company’s website, verify that the website calculates the amount of the credit based on the information you have provided.
You can also pay all premiums at full price and then claim the tax credit on your tax return the following year.
If you take the monthly discount, you must reconcile that actual credit with the discount received on your next year’s tax return. The form of I.R.S. 8962 Premium Tax Credit is the one you must use to claim or reconcile this tax credit. If the discount you took monthly is less than the amount of the annual credit, it means that you are probably entitled to a refund. If the discount was greater than the amount of the credit that corresponded to you, the excess amount becomes part of the tax obligation., which you must return when you file your tax return.
People who purchase health insurance from those commonly offered on the market can choose how much of their APTC they want to apply to their health insurance premiums. They are not required to apply the full tax credit.
If a person is not sure how much money they will earn during the year, or if their income fluctuates during the year, You can adjust the amount of your tax credit to apply to your premiums to avoid an increase in your tax burden at the end of the year.