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Is Premium Tax Credit Repayment Deductible

is premium tax credit repayment deductible

Is premium tax credit repayment deductible? Questions like this are aren’t surprising, especially during the tax season. You want to ensure that your taxes are fully paid; but you also want to know how much money, dollar for dollar, that you can shave off your tax liability. If by virtue of your income, you receive premium tax credits, one of two scenarios will play out as you file your tax returns.

1. The amount you’ve received as Advance Premium Tax Credit (APTC) is more than what you should have received. In this case you need to refund all or part of the difference (a repayment).
2. Your Advance Advanced Premium Tax Credit value is less than what you should have received; in which case you’d get a refund from the IRS if you don’t owe any tax.

Is Premium Tax Credit Repayment Deductible?

Is premium tax credit repayment deductible? Yes, premium tax credit repayment is tax deductible. This means you may be deducted from your income when computing your tax figures. Relevant sections of IRS regulations state, in part, that “any amount of advance payments of the premium tax credit that you did have to pay back can be included in medical expenses.”

Also, any repayment of the Advance Premium Tax Credit is considered to be a premium payment in the same tax year. You can therefore include such repayment.

Advance Premium Tax Credit Repayment

Advance premium tax credit repayment may become necessary as a result of an unanticipated change in your income, or family circumstance during the year. If such changes are not updated with your Marketplace provider, you’ll need to make a repayment. This can be deducted on Schedule A (Form 1040), Itemized Deductions.

How Much Is The Premium Tax Credit?

How much is the premium tax credit? The amount of premium tax credit you receive in any year is based on your household income and your family size. Eligibility for premium tax premium is based on your household income being below 400% of the federal poverty level for your family size. Therefore your both your household income and family size are considered in determining the value of your advance premium tax credit. Any change to your family size whether through divorce, child birth/adoption, a change in the dependent-status of a family member, or death; will have an impact on the value of your premium tax credit.

Repayment Limits For Advance Premium Tax Credits 2019

Repayment limits for Advance Premium Tax Credits for 2019, for different income groups, are as shown on the table below:

Income as % of poverty line Individuals Households
Under 200% $200 $600
At least 200% but less than 300% $775 $1550
At least 300% but less than 400% $1,300 $2,600

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