IRS Says Taxpayers Don't Need to Repay Excess Advance PTC for 2020

Chris Gaetano
Published Date:
Apr 15, 2021

The IRS reminded taxpayers that, due to the American Recovery Plan Act, they do not need to repay excess advance payments of the Premium Tax Credit (PTC) for 2020. The PTC is a refundable credit that helps eligible individuals and families cover the premiums for their health insurance purchased through the Health Insurance Marketplace. An excess advance payment of the PTC is the amount by which a taxpayer's advance payment of the PTC (APTC) exceed his or her PTC. This reminder means that taxpayers with such an excess do not need to file Form 8962, Premium Tax Credit, or report an excess advance PTC repayment on their 2020 Form 1040 or Form 1040-SR, Schedule 2, Line 2, when they file.

The process remains unchanged for taxpayers claiming a net PTC for 2020. They must file Form 8962 when they file their 2020 tax return. Those who already filed their 2020 tax return and who have excess APTC for 2020 do not need to file an amended tax return or contact the IRS.The IRS will reduce the excess APTC repayment amount to zero with no further action needed by the taxpayer, and reimburse people who have already repaid any excess APTC on their 2020 return. Those who received a letter about a missing Form 8962 should disregard the letter if they have excess APTC for 2020. The IRS will process tax returns without Form 8962 for tax year 2020 by reducing the excess advance premium tax credit repayment amount to zero.

The IRS clarified that this only applies to the 2020 tax year. For any other years, the process will proceed as usual.

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