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The American Rescue Plan Act of 2021 (ARPA) removed the “subsidy cliff” for 2021 and 2022 and allowed income earners above the 400% FPL to qualify for some subsidy assistance. Before the act, there was no assistance provided.


Suspension of repayment of the excess APTC applied to tax year 2020 only and means that taxpayers must repay excess APTC in 2021 after reconciling the payment using Form 8962.


Allowing all persons, regardless of income, to qualify for a PTC for premium amounts in excess of 8.5% means repayment amounts triggered by reconciliation will generally be less.


If the APTC exceeds the PTC, the taxpayer must generally repay the difference, as an additional tax. While the repayment is generally limited for those with income below 400% of the FPL, taxpayers with income at or above 400% of the FPL must repay the entire APTC. This “subsidy cliff” has caused many taxpayers with small amounts of additional income to face large unexpected tax bills. Courts have ruled that the IRS has no discretion to waive this repayment, regardless of circumstance.

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