What documentation do I need to file when reconciling excess premium tax credits?
Executive summary
Form 8962 (Premium Tax Credit) plus the Health Insurance Marketplace statement, Form 1095‑A, are the core documents required to reconcile any Advance Premium Tax Credit (APTC) and report excess APTC on a federal return (Form 1040, 1040‑SR, or 1040‑NR) [1] [2]. Additional paperwork and computations—Schedule 2 reporting of any repayment, allocation worksheets when a policy covers people in more than one tax family, and occasional supporting notes (for QSEHRA, year‑of‑marriage calculations, or shared policies)—are required by the IRS instructions and Marketplace guidance [3] [4] [1].
1. Form 1095‑A: the starting point — marketplace premium and APTC detail
The reconciliation begins with Form 1095‑A, the Health Insurance Marketplace Statement, which the Marketplace issues for each policy and reports months of coverage, the second‑lowest cost Silver plan benchmark (SLCSP), and any APTC paid to the insurer; taxpayers must use the 1095‑A information to populate Part II of Form 8962 and cannot complete reconciliation without it [2] [5] [1].
2. Form 8962 and where it goes — attach it to Form 1040 family returns
If APTC was paid for any household member or the taxpayer intends to claim the Premium Tax Credit, the taxpayer must complete Form 8962 and attach it to their Form 1040, 1040‑SR, or 1040‑NR; filing without the completed Form 8962 will delay refunds and can cause rejected e‑files for missing the form [1] [5] [6].
3. Repayment reporting — Schedule 2 and line flow
When Form 8962 shows excess APTC, the amount to be repaid is carried onto Schedule 2 (Form 1040) as required; the 8962 instructions direct taxpayers to enter the smaller of the calculated excess or statutory limits and then report that figure on Schedule 2, line 1a [3].
4. Income, household size, and repayment limits — the substantiation behind the numbers
The allowable Premium Tax Credit and any excess APTC repayment depend on the taxpayer’s final household income (modified adjusted gross income) and family size reported on the return; the IRS and HealthCare.gov emphasize that reconciliation compares advance payments to the PTC the household is actually eligible for based on final income, and repayment limitation tiers apply for households under 400% of the federal poverty line [1] [6] [7].
5. Shared policies, allocations and year‑of‑marriage rules — extra worksheets and documentation
When a Marketplace policy covers individuals who are on different tax returns or when couples marry during the year, Form 8962 contains Parts IV and V to allocate premiums/APTC or apply an alternative year‑of‑marriage calculation; taxpayers should keep written allocation agreements or workpapers showing month‑by‑month splits because the Marketplace issues a Form 1095‑A per policy and IRS guidance requires reconciliations or agreed allocations when two tax families are involved [4] [2] [8].
6. Special entries, employer‑ARR benefits and QSEHRA coordination
Certain situations need explanatory entries on Form 8962— for example, if a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) affects monthly PTC calculations, the instructions require entering “QSEHRA” in the margin and reducing the monthly PTC by the permitted benefit amount to avoid processing delays; taxpayers should preserve QSEHRA plan documents and calculations to justify entries [1].
7. Practical paperwork to keep with the return — what to retain beyond the forms
Beyond the 1095‑A and completed 8962 attached to the Form 1040, taxpayers should retain copies of Marketplace communications, proof of household income (tax returns and supporting W‑2s, 1099s and other MAGI‑related records used to compute final income), any QSEHRA documentation, and written allocations or notes for shared policies or year‑of‑marriage decisions; IRS and Marketplace guidance note that the reconciliation hinges on those figures and that filing without proper Form 8962 will delay refunds [6] [2] [4].
8. When the IRS intervenes and what it means for missing or incorrect filings
The IRS has procedures around missing or incorrect Form 8962 filings (returns can be processed differently for certain years and taxpayers may receive letters), but the consistent message from IRS and HealthCare.gov is that taxpayers who received APTC must reconcile with Form 8962 using Form 1095‑A as the source data or otherwise explain omissions to avoid refund delays or incorrect repayment amounts [6] [5].