The Affordable Care Act requires most Americans to have health insurance, but what if you need help paying for coverage? The Premium Tax Credit is a new refundable tax credit that can lower your monthly health insurance premiums.
To qualify for the credit, you must:
- Purchase health insurance through the Marketplace
- Be lawfully present in the United States
- Be unable to get coverage from an employer or the government
- Not be claimed as a dependent
- If married, file a joint tax return
- And meet certain household income requirements
The Marketplace will estimate your credit amount on a sliding scale. In general, the lower your household income, the higher your credit. Reporting any life changes to the marketplace will help make sure your credit amount is correct.
You can claim the Premium Tax Credit in two ways:
- You may claim some or all of your credit in advance to lower your monthly health insurance premiums.
- Or, you can claim the credit in full for the year with your tax return.
The Premium Tax Credit is refundable. If the credit amount you use throughout the year is less than your final credit amount at the end of the year, the difference will be refunded to you. If you use more than your final credit amount, you may have to pay back the difference with your tax return. If you choose to claim the credit in full, the Premium Tax Credit will either lower your tax bill or increase your tax refund.
Still have questions about the Premium Tax Credit? Visit TurboTax.com/health to learn more about the Affordable Care Act and how it may affect your taxes.