My father currently has Obamacare and his income falls under the poverty level requirements. He recently filed his income taxes and was informed that he owes back the money provided for subsidies. I researched the information on subsidies and tax credits but still no clarity. Can information be provided so that we have a clearer understanding as to why he has to pay back the subsidies. Thank you in advance.
If you projected a higher annual household income then you claimed, you may owe tax credits you received in advance up to the repayment limit for your income when you file 8962 at tax time.
That means you can't pay higher than the amount listed for your family size and % of the Federal Poverty Level (amounts are subject to change each year, so always double check this year's repayment limits).
The repayment limits can be found in the instructions for the 8962 form used to reconcile tax credits. One other cause for having to repay tax credits is due to claiming eligibility, but not being eligible due to having access to affordable employer coverage. Make sure to take exemptions on the 8965 form and to double check payments made using the individual shared responsibility worksheet on the 8965 instructions to avoid overpaying the fee if you missed at least one month of coverage in the year.
Line 28. Repayment Limitation. The amount is limited to certain amounts ensuring you can’t owe more than you can afford if you received too many Advanced Premium Tax Credits. Please note that you’ll owe back all tax credits if you make over 400% and will owe back nothing if you make less than 100%.
|Income % of FPL||Filing Status:
|Less than 200% FPL||$300||$600|
|At least 200% FPL
but less than 300%
|At least 300% FPL
but less than 400%
|If your year end income exceeds 400% FPL, you will have to return the total amount of Advances Premium Tax Credits you received.If you make too little to qualify for subsidies (less 100% FPL), then you owe NOTHING.That being said, if you know you are going to price out of cost assistance, make sure to update your Marketplace account. You may become eligible for a free or low-cost Medicaid plan if your state expanded Medicaid.|
Go here to see income as a percentage of the Federal Poverty Level.