Health Care Subsidy

I got a question about the health care subsidy, and I haven't been able
to find anything about this.
The person qualified for the subsidy, and paid the amount required for
insurance through the exchange. However last year he took money out of
an annuity to buy a business, and that withdrawal pushed his income
well above the limit for qualifying for the subsidy.
I imagine that he'll have to go back and repay the amount of the
subsidy. Is there a penalty on top of that?
Thanks.
Reply to
Stuart O. Bronstein
I assume that what you are calling the "health care subsidy" is the Premium Tax Credit. There is no specific penalty for having to repay it. However, the repayment is treated as additional tax on the tax return, so it could trigger an underpayment penalty.
(There is a cap on the amount that has to be repaid if household income is below 400% of the federal poverty level.
apply in this case.)
The details of the Premium Tax Credit, including the repayment of excess Premium Tax Credit received, are in IRS Publication 974 and the instructions for Form 8962.
Bob Sandler
Reply to
Bob Sandler
From what I can tell, the "Excess advance premium tax credit repayment" is treated as part of the overall tax owed for the year (like AMT). The normal penalties (if applicable) for failure to file, failure to pay, interest on late payments,... presumably still apply. I've never seen anything to indicate a specific penalty for excess APTC exists.
The "Excess advance premium tax credit repayment" is calculated on Form 8962, the repayment amount flows to Form 1040, Schedule 2, and ends up being included on Form 1040 line 11. If income for the year ends up over 400% of the applicable federal poverty level, the taxpayer will almost certainly have to pay all the advance premium tax credit back. See Form 8962 instructions.
Reply to
BignTall
In article ,
We ran into roughly the same problem, after years of negotiation my wife finally sold some real estate and the gain pushed us over the line. My tax preparer just added the ten grand to the tax due.
Reply to
John Levine

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