Do I have to repay my premium tax credit if my income was higher than I estimated?

Short answer: Possibly. The premium tax credit is based on your actual income for the year, so if you received more advance credit than you qualified for, you reconcile the difference on Form 8962 and the excess is added to the tax you owe. If your income stayed under 400% of the federal poverty level, the amount you must repay is capped; at or above 400%, you repay the full excess.

Advance premium tax credits are estimates based on the income you projected when you enrolled. At tax time you must reconcile the amount of credit allowed under section 36B with the advance credit payments. If you earned more than expected, you likely received too much credit, and you will owe taxes if you used more of the premium tax credit than you qualified for.

The law limits how much some people repay: if your household income is below 400% of the federal poverty level, the repayment is capped at a set dollar amount that rises with income. If your income reached 400% of the poverty level or more, that cap does not apply and you repay the entire excess. Reporting a mid-year income change to the Marketplace lowers the chance of a large bill.

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