IRS Instruction 8962 - IRS Forms, Instructions, Pubs 2026

IRS Instruction 8962 – IRS Forms, Instructions, Pubs 2026 – The Premium Tax Credit (PTC) is a valuable refundable tax credit designed to help eligible individuals and families afford health insurance purchased through the Health Insurance Marketplace. If you’ve received advance payments of this credit (APTC) or plan to claim it on your tax return, IRS Form 8962 is essential for calculating and reconciling the amount. This article breaks down the instructions for Form 8962, eligibility requirements, step-by-step filing guidance, and key updates for tax year 2025. Whether you’re a taxpayer navigating Marketplace coverage or a tax professional, this guide uses official IRS resources to ensure accuracy.

What Is the Premium Tax Credit (PTC)?

The PTC helps lower the cost of health insurance premiums for qualified plans bought through the Marketplace (also known as the Exchange). It’s based on your household income, family size, and the cost of a benchmark plan in your area—typically the second-lowest-cost silver plan (SLCSP).

For tax year 2025, the credit is available to those with household income up to or exceeding 400% of the federal poverty line (FPL), thanks to temporary expansions under recent legislation. This means more families may qualify, with no strict upper income limit—eligible taxpayers won’t pay more than 8.5% of their household income for the benchmark plan. If APTC was paid on your behalf during the year, you must reconcile it on Form 8962 to determine if you owe money back or are due an additional refund.

Form 8962 is used to:

Calculate your actual PTC based on your tax return information.
Reconcile any APTC received.
Report excess APTC repayments or additional credits.

You can download the official Instructions for Form 8962 (PDF) from the IRS website here: https://www.irs.gov/pub/irs-pdf/i8962.pdf. For the form itself, visit https://www.irs.gov/pub/irs-pdf/f8962.pdf.

Who Needs to File Form 8962?

You must attach Form 8962 to your tax return (Form 1040, 1040-SR, or 1040-NR) if:

APTC was paid for you or someone in your tax family during 2025.
You’re claiming the PTC for the first time.
APTC was paid for an individual you claimed as a dependent (even if they weren’t enrolled).

Filing is required even if you’re not otherwise obligated to file a return. Failure to file can delay refunds or result in denied credits. Use Form 1095-A (Health Insurance Marketplace Statement), which you’ll receive from the Marketplace by January 31, 2026, to complete the form.

Note: If you’re married filing separately, you may still qualify under exceptions for domestic abuse, spousal abandonment, or living apart.

Eligibility for the Premium Tax Credit

To qualify for the PTC in 2025:

At least one member of your tax family must be enrolled in a qualified health plan through the Marketplace for one or more months.
You can’t be eligible for minimum essential coverage (MEC) from other sources, like employer-sponsored plans (unless unaffordable) or government programs (e.g., Medicare, Medicaid).
Premiums must be paid timely, or at least enough to avoid coverage termination under grace periods or state rules.
Your household income must be at least 100% of the FPL (with exceptions for incomes below if estimated higher by the Marketplace).
You must file a joint return if married (with exceptions).
No one can claim you as a dependent.

Key definitions:

Tax family: You, your spouse (if filing jointly), and dependents.
Household income: Modified adjusted gross income (MAGI) plus certain untaxed income.
Coverage family: Tax family members enrolled in the plan who aren’t eligible for other MEC.
Qualified health plan: Marketplace plans (bronze, silver, gold, or platinum levels), excluding catastrophic or standalone dental plans.

For 2025, a new rule clarifies that a month counts as a coverage month if partial premiums are paid but sufficient to prevent termination. Also, employer coverage affordability for family members is now based on the cost of family coverage, not just employee-only.

If you’re unlawfully present, you can’t claim PTC for your own coverage but may for eligible family members.

Step-by-Step Instructions for Completing Form 8962

Form 8962 has five parts. Use annual totals if coverage was full-year with no changes; otherwise, calculate monthly.

Part I: Annual and Monthly Contribution Amount

This determines your expected contribution toward premiums.

Line 1: Enter your tax family size.
Lines 2a-2b: Calculate household income (MAGI from your return plus dependents’ filing-required income).
Line 3: Total household income (minimum 0).
Line 4: Federal poverty line amount based on family size and state (e.g., $15,060 for one person in contiguous U.S.).
Line 5: Household income as a percentage of FPL (at least 100%).
Line 7: Applicable figure from Table 2 (e.g., 0.0000 for ≤150%, 0.0850 for ≥400%).
Line 8a: Annual contribution (Line 3 × Line 7).
Line 8b: Monthly contribution (Line 8a ÷ 12).

Adjust for Qualified Small Employer Health Reimbursement Arrangements (QSEHRAs) if applicable.

Part II: Premium Tax Credit Claim and Reconciliation of APTC

Reconcile using Form 1095-A data.

Line 9: Check “Yes” if allocating policies or using marriage alternative.
Line 10: Check “Yes” for full-year, no-change coverage; use Line 11 for annual totals.
Columns (a)-(f): Enrollment premiums, SLCSP premiums, contribution, maximum premium assistance, PTC allowed, and APTC.
Lines 12-23: Monthly breakdowns if needed.
Line 24: Total PTC.
Line 25: Total APTC.
Line 26: Net PTC (if Line 24 > 25; enter on Schedule 3, Line 9).

Part III: Repayment of Excess APTC

If APTC exceeds PTC:

Line 27: Excess APTC.
Line 28: Repayment limitation from Table 5 (e.g., $375 for single filers <200% FPL; full repayment if ≥400%).
Line 29: Lesser of Lines 27-28 (enter on Schedule 2, Line 1a).

For 2025, repayment caps still apply, but they end for tax years after 2025.

Part IV: Shared Policy Allocations

For shared policies (e.g., with ex-spouse or another family):

Use Table 3 for allocation situations (e.g., 50/50 default for divorced).
Enter percentages (0-1.00) for premiums, SLCSP, and APTC on Lines 30-33.

Part V: Alternative Calculation for Year of Marriage

Optional if married in 2025 with pre-marriage coverage. Use Pub. 974 to potentially reduce excess APTC repayment.

Round amounts to whole dollars and attach statements if more than four allocations.

Key Changes and Updates for Tax Year 2025

Coverage Month Definition: Partial premium payments may now qualify a month for PTC if they prevent termination.
Employer Coverage Affordability: Determined by family coverage cost (≤9.02% of income for 2025).
Expanded Eligibility: No 400% FPL cap; PTC available beyond, capped at 8.5% of income.
Repayment Caps: Still in place for 2025, but eliminated starting 2026—full repayment required then.
Individual Coverage HRAs: May affect eligibility if affordable.

Report changes (e.g., income, family size) to the Marketplace promptly to adjust APTC and avoid surprises.

Common Mistakes to Avoid When Filing Form 8962

Using incorrect SLCSP premiums—verify via HealthCare.gov if Form 1095-A is wrong.
Forgetting to allocate shared policies.
Miscalculating household income or family size.
Not reconciling even if APTC was minimal.
Ignoring exceptions for married filing separately.

Electronic filing through IRS Free File or VITA programs can help ensure accuracy.

Where to Get Help and Download Resources

For the most current guidance, visit the IRS website. Download the Instructions for Form 8962 here: https://www.irs.gov/pub/irs-pdf/i8962.pdf. The form is available at https://www.irs.gov/pub/irs-pdf/f8962.pdf. If you need Form 1095-A, log into your Marketplace account or contact them directly.

Consult Pub. 974 for complex situations like alternative marriage calculations or self-employed health insurance deductions.

By properly completing Form 8962, you can maximize your PTC and avoid penalties. If your situation is complicated, consider professional tax advice to ensure compliance with 2025 rules.