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ikram1998
Level 2

Unemployment and Premium Tax Credit for 2021

Hello We have Health insurance thru Obamacare (health care market place). If me or my spouse received unemployment income any time during 2021 and we are filing joint return then what I heard was no matter what the actual income of the couple was they only count 133% of federal poverty line for the calculations of Premium Tax credit eligibility for 2021. If that is true, then all our Premiums we have been paying this year thru market palce should be returned back when we eventually file the 8962 form next year, Correct ?

4 Replies
JandKit
Employee Tax Expert

Unemployment and Premium Tax Credit for 2021

Hi IKRAM 1998,

 

The American Rescue Plan Act of 2021, enacted on March 11, 2021, suspended the requirement to repay excess advance payments of the premium tax credit (excess APTC)  for tax year 2020

If you already filed a 2020 return and reported excess APTC or made an excess APTC repayment, you don’t need to file an amended return or take any other action.

If you have not filed your 2020 tax return, here’s what to do:

  • If you have excess APTC for 2020, you are not required to report it on your 2020 tax return or file Form 8962, Premium Tax Credit.
  • If you’re claiming a net Premium Tax Credit for 2020, you must file Form 8962, Premium Tax Credit 

 

I was able to find no reference to the Premium Tax Credit for 2021. To date, there is no word as to the treatment of the Premium Tax Credit as related to unemployment received in 2021. I do submit this link for your reference.

It is an excellent questions and certainly worth the time and effort!

 

https://www.irs.gov/affordable-care-act/individuals-and-families/premium-tax-credit-claiming-the-cre...

 

JandKit

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CharlesO
Employee Tax Expert

Unemployment and Premium Tax Credit for 2021

Hi Ikram,

What changed in the Premium Tax Credit for 2020 due to the American Rescue Plan Act is that if you received excess advanced payments (the subsidy to reduce your premium) you will not be required to repay the excess.

IRS Premium Tax Credit 

So you won't get all of your premiums back but you will not be required to pay anything back. If your income was reduced in 2020 vs what you reported when you signed up for the income it is still possible that you paid too much and will get a credit on your return.

 

I hope this helps.

 

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ikram1998
Level 2

Unemployment and Premium Tax Credit for 2021

Hello Charles, Your answer was for the year 2020 taxes. But my question was specific to 2021 tax year that we will file in 2022. Can you pls answer that in that context ? 

AmeliesUncle
Level 12

Unemployment and Premium Tax Credit for 2021

Yes, for 2021 (and ONLY 2021) if you collect unemployment, your income will be considered as 133% of the Federal Poverty Level for purposes of calculation the Premium Tax Credit, regardless of your actual income.

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