1095A Health Insurance Tax Credit

[Adona]

I received money for the health insurance tax credit to offset the monthly health insurance premiums I paid based on the unemployment income I received, but took money from my IRA in Nov which made my income for the year higher, will I have to pay back some of the money I received for the tax credit?  How do I pay that back is it calculated as part of the taxes I will owe for the year?  When do you have to pay taxes if you owe, can you get an extension to pay later in the year?

[TeresaM · Accepted solution]

It depends. You may qualify for the IRA distributions to be calculated over several years, rather than all in 2021, depending on your circumstances. Turbotax will ask you questions in that 1099-R area to determine which options apply.

Also, there are repayment limits of the Premium Tax Credit.  If your income changed from your estimates, it will be reconciled on your tax return using your income and your 2021 1095-A form. You will enter this into TurboTax to calculate your Premium Tax Credit. Part of the calculation is the repayment limitation.  It looks at your income as a percentage of the federal poverty line and establishes limits on the amount you have to repay. This is the repayment limitation chart from the IRS instructions for Form 8962 Premium Tax Credit (PTC).

For example, if you file single and your income is less than 200% of the federal poverty level for 2021, you will only need to pay back $325 of any Premium Tax Credit over-payment calculated by Healthcare.gov. There were no repayments of the credit for 2020.

Please click this link to see the federal poverty level limits, which vary according to where you live.

Federal Poverty Levels

If you do have to pay back some of the advance payments, yes, that will be added in with your other tax liabilities and credits and part of the final number.
If you do need to request a payment plan with the IRS, you can do that with TurboTax when you file your return. If you wait until after you file, you would need to do that directly with the IRS.
Please see this TurboTax Help article for instructions for installment plans, if that should be necessary.
IRS installment plans