Basically, the Premium Tax Credit is based on your annual income, not your monthly income. At the end of the year when you fill out your tax return, form 8962 is used to reconcile what you received based on your projected ANNUAL income versus what your ANNUAL income actually was.
This means, even if you earned nothing for 10 months and then earned $50k in 2 months, your premium tax credit would be based on the $50k you earned in the last 2 months instead of the first 10 months of the year. For 2023 to 2025, the repayment is limited to 8.05% of your income.
What is the Premium Tax Credit (PTC) and What is Tax Form 8962?
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