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May 13, 2021

TAS Tax Tips: Taxpayers with an excess advance Premium Tax Credit are not required to report or repay in 2020

Advanced Premium Tax Credit Updates for 2020 Tax Return

The Internal Revenue Service recently announced that taxpayers with excess advanced Premium Tax Credit (APTC) for 2020 are not required to file Form 8962, Premium Tax Credit, or report an excess APTC repayment on their 2020 Form 1040 or Form 1040-SR (Schedule 2, Line 2), when they file.

Taxpayers who have already filed their 2020 tax return and who have excess APTC for 2020 do not need to file an amended tax return or contact the IRS. The IRS will reduce the excess APTC repayment amount to zero with no further action needed and reimburse people who have already repaid any excess. Taxpayers who received a letter about a missing Form 8962 should disregard the letter if they have excess APTC for 2020.

The process remains unchanged for taxpayers claiming a net PTC for 2020; they must file Form 8962 with the 2020 tax return. See the Instructions for Form 8962 for more information. If the IRS sends a letter or a notice asking for more information, taxpayers must respond in order for IRS to be able to complete the processing of their tax return.

Taxpayers who received the benefit of APTC prior to 2020 must file Form 8962 to reconcile their APTC and PTC for the pre-2020 year when they file their federal income tax return, even if they otherwise are not required to file a tax return for that year.  The IRS continues to process prior year tax returns and will correspond for missing information. So, if the IRS sends a letter or notice about a prior year tax return requesting the Form 8962 or other information, taxpayers must respond in order for IRS to be able to complete the processing of the tax return.

See the IRS News Release, the Form 8962, Premium Tax Credit, and IRS Fact Sheet for more details about the changes related to the PTC for tax year 2020. You can also see our Health Care Premium Tax Credit Get Help page. We will be updating it with the above information shortly.