Why is Turbotax saying I have to pay back all of the advance payments I got for the premium tax credit? Edit: SOLVED

[miniwrite]

Edit: Figured it out! I had forgotten that I had a second 1095-A from a different plan I had earlier in the year.

I enrolled in a state marketplace health insurance plan in 2020, and I qualified for some money off my monthly premiums via advance payments of the premium tax credit. But now Turbotax is saying I actually qualified for $0 of the credit and have to pay it back in full, and I don't think that's correct. I'm a household of 1 and definitely made less than $49,000, I can't get insurance from my employer, I'm not anyone's dependent, and I paid all my premiums. What's going on? I think I very slightly underestimated my income for the year, but only by $1,000 or so. Would that make this big a difference?

My only other thought is that my insurance provider gave people 50% off their December premiums as COVID relief - maybe Turbotax doesn't know that and thinks I didn't pay in full in December? Can anyone help?

[ColeenD3]

It won't matter.

Q. What happens if my income changes and my premium subsidy is too big? Will I have to repay it?

A. For the 2020 plan year, the answer is no. This is due to the American Rescue Plan (ARP), which was signed into law by President Biden in March 2021. The ARP provides a one-time relief from excess premium subsidy repayments, but it’s only for the 2020 plan year. It’s challenging to accurately project annual income in a normal year, but the COVID pandemic made it particularly challenging for 2020. To address this, Section 9662 of the ARP clarifies that for 2020 only, people do not have to repay excess premium subsidies. This is true regardless of whether their total household income exceeded 400% of the poverty level, and it’s true regardless of the reason their income ended up being larger than projected.

[EFDisaster]

I started helping my friend fill out her taxes a couple of weeks ago and her underestimation of 2020 income was showing a large payment due because of this... has the turbotax system been updated to reflect this one-time relief? If we sign back in will we see a change?

[MaryM428]

No TurboTax has not been updated, because the IRS is still reviewing the information and how the changes will be implemented.  We do know that the IRS does not want people to amend their return due to this one-time relief for 2020.  TurboTax will implement changes when the IRS has given this guidance.

Here is a statement from the IRS with a link to check for updates.

We’re reviewing the tax provisions of the American Rescue Plan Act of 2021, signed into law on March 11, 2021. Taxpayers who filed a 2020 tax return and reported an excess advance premium tax credit repayment on Line 29 of Form 8962, Premium Tax Credit, should not file an amended tax return only to get a refund of this amount. The IRS will provide more details soon. For the latest updates, check IRS.gov/coronavirus.

IRS Premium Tax Credit

[aargreen]

We are facing a similar situation, my spouse was on the affordable health care plan and then we cancelled his plan in August because I got a job.  Will section 9662 still apply for us since we only carried market place insurance from January until August?  Also, do you have an idea when Turbotax would be updated to reflect this?  We are holding off on filing until we see the changes.

[MaryM428]

You will not have to pay back the advanced premium for 2020.

TurboTax is currently being updated to reflect the forgiveness of the 2020 advanced payment payback.  We expect those changes to be implemented in TurboTax very soon, although a date has not been announced.

You do want to hold off on filing your return until TurboTax has implemented the changes needed by the American Rescue Plan Act.

Premium Tax Credit
 

@aargreen

[Lee337]

How will we know when TurboTax has implemented the ARPA-specific changes as they relate to the Advance Premium Tax Credit? The program SAYS it will email me, but I'm not exactly sure it knows my email address. It never asked me for it! So, how will I find out TurboTax has had THAT specific change updated for both Federal and my state, California?

[LinaJ2020]

We are still waiting on the IRS.  There is no guidance has been issued yet.  They will provide more details soon.   To read details from the IRS, click here:

https://www.irs.gov/affordable-care-act/individuals-and-families/premium-tax-credit-claiming-the-cre...

@Lee337

[Lee337]

Has the program been updated yet?

[Cynthiad66]

No.  

I imagine that TurboTax is waiting for guidance from the IRS on how they want taxpayers and tax preparation companies to handle the repayment of the Premium Tax Credit. 

Just because the law was passed doesn't meant that TurboTax and other vendors have sufficient information on how to code this.

So far, we are given to understand by the IRS that taxpayers should not amend their returns yet, because the IRS is considering automatically refunding these amounts (in a way similar to how they say they will refund the taxes on the first $10,200 of unemployment).

However, because any self-employed taxpayers who have Marketplace insurance can deduct excess Premium Tax Credit (PTC) as part of the Self-employed health insurance deduction on line 16 of Schedule 1 (1040), this will have to be changed as well if the excess (PTC) is no longer taxable (if it's not taxable, then it can't be deductible, either).

My point is that this is all a non-trivial exercise since there are potentially many moving parts, and that everyone needs to hold their breath and let the IRS and the tax software vendors work through this.

Per @BillM223

[Gianna095]

I’m confused. So I was getting $800 back now they’re saying I owe $300 because I received the credit for my insurance premium that I wasn’t entitled to. However with the new administration that is now waved. So will I be getting the original $800 refund? I was never on unemployment. How is this being handled? I do not understand the reference to unemployment.

also from the above conversation I should not file an amended return? When will we know more information?

[ThomasM125]

@Gianna095 Your premium tax repayment amount would be listed on line 2 of your Schedule 2. Under the new tax regulation that pertains to it, you should get that amount refunded if you already filed your tax return. As of now, you don't need to amend your tax return to get that amount refunded to you.

[tovaface]

I am facing the same issue for my 2021 return. TT is telling me I don't qualify for any premium tax credit even though my AGI is well below the 400% federal poverty level limit.  After reading the stream of responses, I wonder if TT has updated its software correctly for 2021.

I also noticed they haven't fixed the problem with Form 1116 yet either.

What's going on TT? When are you going to get your act in order? Tax filing season is here!

[DaveF1006]

@tovaface It depends. In the beginning of the year, you report the amount of estimated income you earn during the year. Based on that estimate is the amount that the government will subsidize your premium. If you overestimate your income, then you you will owe a tax. If you underestimate your income, you will receive a premium tax credit. If your estimate is accurate, then there is no premium tax due or a premium tax credit.

Without looking at your return, it is difficult to ascertain if the program is calculating correctly.  My suggestion is to select tis Healthcare.gov link and read the step by step guide that is provided in the link. Download the 8962 and then compare this form with the 8962 that is generated in Turbo Tax based on the information that is in 1095A.

According to Turbo Tax, form 1116 will be available 03/03. 

[tovaface]

This would have been good advice if it worked. It did explain what should appear on the Form 1095, but I wasn't able to find the correct numbers to put on the form. The healthcare.gov site just referred me back to my state, AccessHealthCT, which was a dead end. After 2 calls to them and 2 more to my insurer, they will hopefully send me a correct form soon. Their errors on the 1095 form are likely what messed up TurboTax. It would've been nice if TT was able to alert me to the error instead of just telling me I don't qualify. That just compounds bad information with more bad information.

I'll hope for the best with Form 1116 next week. I recall there were quirks with it last year that I needed help from one of your tax experts to resolve.