We are lawful permanent residents with ACA insurance. We qualify for premium tax credit despite income below poverty line. How can we get Turbotax to recognize this?

[likungchuen]

Since there is no way to update citizenship status in Turbotax, it does not recognize that we qualify and fails to generate Form 8962 and Schedule 3 with our information.

[DoninGA]

Your citizenship is not relevant.  If you are a legal US resident and have a valid Social Security number for work or an ITIN issued by the IRS you can file a federal tax return.

Did you enter all the taxable income you both received in 2023 on the federal tax return?

Did you receive a Form 1095-A for health insurance?  If so, you should have entered the 1095-A so that the Form 8962 can be completed by the TurboTax software.

To enter, edit or delete your Form 1095-A -

• Click on Federal Taxes (Personal using Home and Business)
• Click on Deductions and Credits
• Click on I'll choose what I work on (if shown)
• Scroll down to Medical
• On Affordable Care Act (Form 1095-A), click the start or update button

Or enter 1095-a in the Search box located in the upper right of the program screen. Click on Jump to 1095-a

[GayleS03]

Tagging onto the original question, I am checking on whether TT can correctly calculate the Premium Tax Credit for a case where the income is below the poverty line. After entering all other info (including the 1095-A), the credit is there when the income exceeds the poverty level, but if I change the income to a lower amount (below the poverty level), the credit is removed. Is there a solution? 

[NCperson]

@GayleS03 - let's make sure we are using the terminology correctly.

When you signed up for ACA, your premium was based on your estimated income and you family size. 

On your tax return, if your actual income was higher than what was estimated you owe more premium (so more tax).  HOWEVER, if your income is below 100% of the federal poverty level, you do not owe the additional premium (so no additional tax) .

if your actual income was LOWER than what was estimated, it is possible that more premium is returned to you in the form of a tax credit. 

I am assuming there was no change in the family size from when you signed up for ACA compared to the tax return. 

why are you looking for a solution? your actual income is your actual income.  you can't just arbitrarily change it. 

when you state the "credit" is there when your income exceeds the poverty level, do you mean a) the refund goes down / the amount owed goes up OR b) the refund goes up / the amount owed goes down? 

[GayleS03]

Thanks, NCperson, for responding. 

I am modeling the tax outcome for a person entering the US (will have a Green Card) in 2024, and using my 2023 TT (desktop premium) to gauge whether TT handles the PTC the way I understand the rules. This person will not have much income, but could potentially earn enough to be ineligible as a dependent on anyone else's return... ($4,701 should be the amount for 2023 in my scenario)....  While most ACA enrollees must have income => the poverty level to qualify for a subsidy, that requirement is supposedly not applicable for new immigrants within their first 5 years of residency. (Because they are not eligible for Medicaid during that 5 year period.) So, I was setting up a dummy return and testing it at both the poverty level (using $13,600 of income) and at a lower amount (using $6,000).  The software provided the Premium Tax Credit for the scenario with income at the poverty level ($13,600), but not for the scenario with the lower income ($6,000).  I'm wondering if this is user error somehow (imagine that, lol) or a system limitation....  FYI, it's possible this individual could work some and reach the level to become ineligible as a dependent, but probably not up to that poverty level, etc. 

Thanks for your perspective or recommendation!

[NCperson]

@GayleS03 - can you please go back and answer my questions.  I wonder if there isn't a misunderstanding on what the credit is: 

<<After entering all other info (including the 1095-A), the credit is there when the income exceeds the poverty level, but if I change the income to a lower amount (below the poverty level), the credit is removed. Is there a solution? >>

that is the way it works.  But you are using the word 'credit' - are you meaning the amount you owe goes up or down? 

Again, when you sign up for ACA, you estimate your income.  When you complete your tax return, you know your Actual income. if the income is higher than you estimated, you OWE the IRS.  The Premium Tax Credit REDUCES the refund.

but if your income is below the FPL, then you do not have to pay back the credit.  

In your test scenarios, what is on line what is on lines 5 and 29 of Form 8962 for each scenario.  Line 29 is the amount you OWE the IRS. if your income is higher on the tax return than what you tell ACA, you normally OWE (unless your income is below the FPL).

[GayleS03]

Hi again... First, to answer your questions...#1  by "credit" I mean the tax credit that would show on line 24 of the 8962.  #2... lines 5 and 29 for my scenarios.... there is no 8962 generated when I put income below the poverty level (and when there is no advance credit, etc.) and if I put the income at the poverty level, 5 is 100% and 29 is $0.. But my scenario assumed NO advance credit - as if cash was paid for all months rather than using a credit. 

However, after playing around with the software some more..... if I set the return up with even $1 of advance credit (vs none), the software does generate the 8962 and the math looks correct.  You should not have to request the advance credit to get the correct amount on the return though, so I'm wondering if there is a bug... This family didn't want to request an advance credit... they wanted to see what earnings she can build and deal with it in early 2025....