IRS Form 8962 – Premium Tax Credit (PTC)

IRS Form 8962 – If you’ve purchased health insurance through the Health Insurance Marketplace and received help paying your premiums, IRS Form 8962 is essential for reconciling those benefits on your tax return. This form helps calculate your Premium Tax Credit (PTC), a refundable credit that lowers your health insurance costs. For tax year 2025, filing in 2026, understanding Form 8962 ensures you claim what you’re entitled to—or repay any excess—accurately. This guide covers everything from eligibility to step-by-step instructions, using the latest IRS updates.

What is the Premium Tax Credit (PTC)?

The PTC is a tax credit designed to make health insurance more affordable for eligible individuals and families. It’s available to those who buy coverage through the Marketplace (also known as exchanges like HealthCare.gov). The credit can be taken in advance as Advance Payments of the Premium Tax Credit (APTC), which reduce your monthly premiums directly, or claimed fully when filing your taxes.

Form 8962 reconciles the APTC you received with the actual PTC you’re eligible for based on your final household income and family size. If you underestimated your income, you might owe back some APTC; if overestimated, you could get an additional credit as a refund. For 2025, the PTC remains expanded, allowing eligibility even if household income exceeds 400% of the federal poverty line (FPL), thanks to temporary legislative changes.

Key benefits include:

  • Reducing out-of-pocket premium costs.
  • Potential tax refund if APTC was less than your entitled PTC.
  • Reconciliation to avoid penalties or overpayments.

Who Needs to File Form 8962?

You must file Form 8962 with your Form 1040, 1040-SR, or 1040-NR if:

  • APTC was paid for you or anyone in your tax family during 2025.
  • You want to claim the PTC for Marketplace coverage.
  • APTC was paid for someone you enrolled but didn’t claim on your return.

Even if you’re not required to file a tax return otherwise, attach Form 8962 if APTC was involved. Note: If you’re married filing separately without qualifying exceptions (e.g., domestic abuse or spousal abandonment), you can’t claim the PTC but must file to repay APTC.

Your “tax family” includes you, your spouse (if filing jointly), and dependents. The “coverage family” refers to those enrolled in the qualified health plan.

Eligibility Requirements for the PTC in 2025

To qualify for the PTC, you must meet these criteria:

  1. At least one month of Marketplace coverage in a qualified health plan (bronze, silver, gold, or platinum—not catastrophic or dental-only plans).
  2. Not eligible for other minimum essential coverage (MEC) like affordable employer plans, Medicare, Medicaid, or CHIP. Employer coverage is affordable if the employee/family contribution is ≤9.02% of household income.
  3. Household income at least 100% of the FPL (exceptions for those who estimated higher at enrollment or lawfully present immigrants ineligible for Medicaid).
  4. Not claimed as a dependent on someone else’s return.
  5. If married, file jointly (exceptions for living apart, head of household, or abuse/abandonment victims—limited to 3 years).

For 2025, there’s no upper income limit (above 400% FPL), but repayment of excess APTC may apply without caps starting after 2025. Unlawfully present individuals are ineligible, and incarcerated family members don’t disqualify others.

Household income is your modified adjusted gross income (MAGI) plus that of dependents required to file returns. Use 2024 FPL tables for 2025 calculations.

How to Fill Out Form 8962: Step-by-Step Guide?

Form 8962 has five parts. You’ll need Form 1095-A from the Marketplace. Download the form here: IRS Form 8962 PDF.

Part I: Annual and Monthly Contribution Amount

  • Line 1: Enter tax family size.
  • Line 2a: Your MAGI (AGI + tax-exempt interest + foreign income + nontaxable Social Security).
  • Line 2b: Dependents’ MAGI (if they must file).
  • Line 3: Total household income (2a + 2b).
  • Line 4: FPL from Table 1-1 (48 states/DC), 1-2 (Alaska), or 1-3 (Hawaii).
  • Line 5: Income as % of FPL (Line 3 / Line 4 × 100; enter 401 if >400).
  • Line 7: Applicable figure from Table 2 (0.0000 for ≤150% to 0.0850 for ≥400%).
  • Line 8a: Annual contribution (Line 3 × Line 7).
  • Line 8b: Monthly contribution (8a / 12).

Part II: Premium Tax Credit Claim and Reconciliation

  • Line 9: Yes if allocating policy amounts (go to Part IV) or using marriage alternative (Part V); otherwise, No.
  • Line 10: Yes for annual calculation (if full-year coverage, no changes); No for monthly.
  • Line 11 (Annual): Enter totals from Form 1095-A Line 33 for columns (a) enrollment premiums, (b) SLCSP premiums, (c) contribution (8a), (d) max assistance (b – c), (e) PTC allowed (lesser of a/d), (f) APTC.
  • Lines 12-23 (Monthly): Break down per month from Form 1095-A Lines 21-32.
  • Line 24: Total PTC (sum of e).
  • Line 25: Total APTC (sum of f).
  • Line 26: Net PTC (if 24 > 25, enter on Schedule 3, Line 9; if equal, 0; if 25 > 24, go to Part III).

Part III: Repayment of Excess APTC

  • Line 27: Excess APTC (25 – 24).
  • Line 28: Repayment limit from Table 5 (based on income % FPL and filing status; no limit if ≥400%).
  • Line 29: Lesser of 27/28; enter on Schedule 2, Line 1a.

Part IV: Allocation of Policy Amounts

For shared policies (e.g., divorce, separate filing). Enter policy details, SSNs, months, and percentages (e.g., 0.50) for premiums, SLCSP, and APTC.

Part V: Alternative Calculation for Year of Marriage

Optional if eligible (unmarried Jan. 1, married Dec. 31, joint return, APTC paid). Reduces repayment; use Worksheets 3 and Table 4.

Common Mistakes and How to Avoid Them

  • Using incorrect SLCSP premiums: Verify with HealthCare.gov tool if missing.
  • Forgetting allocations for shared policies.
  • Math errors in sums or percentages.
  • Not noting “QSEHRA” if applicable (small employer reimbursements).
  • Ignoring unpaid premiums: Enter -0- if insufficient to maintain coverage.
  • Wrong FPL table: Use the highest if multi-state residency.

Double-check Form 1095-A (use corrected versions) and keep records.

Required Documents for Form 8962

  • Form 1095-A (sent by Marketplace by Jan. 31, 2026).
  • Tax return details (AGI, dependents).
  • Worksheets from instructions (e.g., MAGI, FPL %).
  • Pub. 974 for advanced scenarios like QSEHRA or allocations.

Recent Updates for Tax Year 2025

  • Coverage month definition: Now includes partial unpaid premiums if enough paid to avoid termination (grace periods, thresholds).
  • No automatic MEC forms (1095-B/C); request if needed.
  • Employer affordability: Includes family costs, not just employee.
  • Expanded eligibility through 2025 (no 400% FPL cap), but full repayment of excess APTC without limits after 2025.
  • Report changes to Marketplace for accurate APTC.

Frequently Asked Questions (FAQs)

What if I didn’t receive Form 1095-A?

Contact the Marketplace; it’s required for Form 8962.

Can I claim PTC if income is below 100% FPL?

Yes, if you estimated higher at enrollment and received APTC.

What happens if I owe excess APTC?

Repay via Line 29; limits apply based on income (e.g., $375 for single under 200% FPL).

Is PTC available for self-employed individuals?

Yes, if eligible; it may also affect self-employed health insurance deduction.

How do I handle multiple Forms 1095-A?

Sum amounts for each month or annual totals.

For more, see IRS Pub. 974 or consult a tax professional.

Navigating Form 8962 can seem complex, but with accurate info from trusted sources like IRS.gov, you’ll ensure compliance and maximize benefits. File electronically for faster processing, and remember: accurate reconciliation prevents surprises. If you have questions, visit IRS.gov or use tax software for guided help.