Form 8962 line 5 is 401% but when I divide line 2a by line 4 I get 408%

[mbrna]

Form 8962 line 5 shows 401% but when I divide line 2a by line 4, I get 408%

This is important because TTax is saying I should get a tax credit for my insurance premiums, when I am NOT below the 400% line for the cutoff.

Help!

[BillM223 · Accepted solution]

"Form 8962 line 5 shows 401% but when I divide line 2a by line 4, I get 408%"

TurboTax (and the IRS) max out the entry on line 5 to 401%, so this is not an error.

"This is important because TTax is saying I should get a tax credit for my insurance premiums, when I am NOT below the 400% line for the cutoff."

There have been changes in this area by the IRS (see below). Again, TurboTax is doing it correctly.

Note that the 8962 instructions state (on page 1 under "Applicable federal poverty line percentages":(

"For tax years 2023 through 2025, taxpayers with household income that exceeds 400% of the federal poverty line for their family size may be allowed a PTC."

[mbrna]

Thank you for the clarification! Does any of this assume that Health Insurance paid some portion of our medical bills? We paid insurance premiums, but opted not to use insurance coverage and we did self-pay for the year. Somehow, being able to afford insurance premiums AND pay medical bills out of pocket tells me we are not supposed to get anything from the government in this respect.

[JulieS]

No, for the purpose of the Premium Tax Credit, it doesn't matter whether or not you used your insurance. 

If your income is more than 400% of the federal poverty line and 8.5% of your MAGI is less than the SLCSP, you are eligible for a Premium Tax Credit to bring down the cost of the SLCSP to 8.5% of MAGI. 

The effect of this temporary law is to provide some cost relief for taxpayers whose income is more 400% of the federal poverty line.