Form 8962 incorrect FPL used for family size 2

[delta_hotel]

Hello experts,

I was modeling different tax scenarios when I discovered a peculiarity with form 8962.  With a family size of 2 the FPL on line 4 is $17,420 which is 2021 FPL number.  I expected it to be $18,310 for a family of 2 for 2022. After all, I'm modeling 2022 tax year.   This is important because the threshold for 400% FPL is lower and thus the repayment limitation of $2,800 goes away with a lower AGI.

I'm up to date with my software.  Can anyone give me a reason why FPL for Turbo Tax calculation is $17,420 and not $18,310 as I would expect.

Thanks for any input provided.

Dave

[Bsch4477]

Read the instructions for that form. The 2021 figure is used for 2022 returns. 

https://www.irs.gov/pub/irs-pdf/i8962.pdf

[rjs · Accepted solution]

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@delta_hotel wrote:

Can anyone give me a reason why FPL for Turbo Tax calculation is $17,420 and not $18,310 as I would expect.

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TurboTax is using the correct amount. The reason that TurboTax is using the 2021 poverty level figure is that that's what the IRS instructions say to use. The 2022 IRS Instructions for Form 8962 line 4, at the top of page 7, say "For 2022, the 2021 federal poverty lines are used for this purpose and are shown below."

[delta_hotel]

Thank you for your answer.   As you pointed out, the FPL used for tax purposes is from the prior tax year.   Not sure I understand the logic since we already know the 2023 FPL number.   It is clear from the instructions to use the prior tax year so that is what I will do!

Thanks again.

Dave

[dmertz]

The FPL is a factor in determining the APTC.  Because the current-year FPL is not published until after the beginning of the current year, the current-year FPL is not available in time to be used for the current-year calculations which need to be done prior to the beginning of the current year.

[snipely]

I understand this is how the IRS does it but it makes no sense.  Why not use a predicted number that's for the year actually in use?  Anyway, you wouldn't need the number until tax filing time, so for example by 2025 filing deadline the 2024 value should be available.  Why compare 2024 income to 2023 FPL?  You should be eligible for the subsidy in the year that you use it.

[dmertz]

The IRS uses the FPL required by law:

26 U.S. Code § 36B(d)(3)(B) Poverty line used

In the case of any qualified health plan offered through an Exchange for coverage during a taxable year beginning in a calendar year, the poverty line used shall be the most recently published poverty line as of the 1st day of the regular enrollment period for coverage during such calendar year.