Regarding Premium Tax Credits

[SJB889]

Due to an income error, I have paid back premium tax credits (on line 29 - form 8962) because my income was higher than estimated, however I understand that I may be able to claim the overpayment back through the tax credit reconciliation process. Is this correct? if yes, how does it work? 

Also, can this excess advance PTC repayment AMOUNT entered on line 29 of form 8962, from last year, be entered as part of my medical expenses when preparing my current tax returns?

Please advise. Thank you.

[Vanessa A]

The tax credit reconciliation process is what form 8962 is used for.  It reconciles the amount you received with the amount you should have received.  If you received too much and are paying it back on line 29 of your 8962, you cannot claim the payment back.

However, if you are itemizing your expenses, then yes, you can use the amount you repaid as part of your medical expenses.  Itemized expenses include mortgage interest, gambling losses up to winnings,  charitable contributions, state and local taxes up to $10,000, medical expenses in excess of 7.5% of your AGI and casualty and losses in excess of 10% of you AGI with the first $100 not counting towards the loss.  Your health insurance and all medical expenses are only deductible for the amount that is over 7.5% of your AGI.  This means if your AGI is $50,000, then the amount that is over $3,750 is deductible.  

Then your total itemized expenses would need to be greater than your standard deduction below in order to benefit from your expenses. 

The 2024 Standard Deductions are as follows:

• Married Filing Joint (MFJ)              $29,200
• Married Filing Separate (MFS)      $14,600
• Head of Household (HOH)             $21,900 
• Single                                                 $14,600                                

Blind or over 65 and MFJ or MFS add $1,550

Single or HOH if blind or over 65 add $1,950

Standard versus Itemized Deduction