The Health Insurance Tax Credit and Your Taxes
At the end of the year, the IRS will verify your actual annual income and family size are the same as what you reported. Next, the agency will compare the advance payments you’ve received with what you qualify for. If you qualify for more than you were given, you will see this reflected in your tax amount owed and/or your tax return. Conversely, if you received too much, you’ll have to repay the excess. If you have a change in income during the year, you should report it immediately as the tax credit you qualify for will likely change as well.
Avoid Adding to Your Tax Payments
To make sure you don’t add to your tax payments by receiving too much in advance payments, you must update your information when big changes like getting married, gaining employment, income change or moving locations. Consider these options to avoid negatively impacting your taxes:
- Reporting important changes in family size, location or income (10 percent change or greater) within 30 days of the occurrence.
- Take a little less than your advance payment per month.
- Pay the full premium and receive the tax credit after the fact in your refund or decreased tax owed.
If you want to learn more about the affordable health care act and how it affects you and you tax credit, get in contact with us at Sackett & Associates Insurance Services at (707) 823-3689 or follow us on Twitter, Google+ and Facebook!