American Rescue Plan Act & ACA APTC for 2020 1040

[stvyreb]

hello, got an email from my US Senator, that says this :

" * In addition, the /American Rescue Plan/ exempts low- and moderate-income
families from having to repay the premium tax credit they received in 2020.
This will protect people who experienced unexpected changes in income in
2020 from having high repayments when filing their taxes."

anyone happen to know if this is true, should I wait to file my 1040 till a later date, when these provisions might be incorporated?

or how this is to work ?

[lazynovice]

Forum rules do not allow discussion of pending legislation. The bill has to go back through the House and then be signed by the President. Tax returns are not due until April, can be extended if needed or amended if needed.

[iamblessed]

My tax man told me about this to. I would wait to file your taxes. I think it will effect the Federal return only but I am not sure. I am going to wait.

[LadyGeek]

This thread has run its course and is locked. Speculation about future legislation is prohibited by forum policy, see: Unacceptable Topics

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[LadyGeek]

The president has signed the bill into law. This thread is unlocked to continue the discussion.

[aschafer1984]

Single filer here with no dependents.

My AGI in 2020 was over 75K, however in 2019 it was below this treshold. I have not filed my 2020 taxes yet in anticipation of this. Now that the bill is law, any issues with filing my taxes now or would it be best to wait until the $1,400 payment has been received.

[FrugalProfessor]

Single filer here with no dependents.

My AGI in 2020 was over 75K, however in 2019 it was below this treshold. I have not filed my 2020 taxes yet in anticipation of this. Now that the bill is law, any issues with filing my taxes now or would it be best to wait until the $1,400 payment has been received.

Wait until the $1.4k is in hand. File an extension if needed. It'll cost you $1.4k if you do so early: https://frugalprofessor.com/stimulus-ro ... hase-outs/

Filing early would be particularly harmful for those with many kids whose 2019 AGI <= $150k & 2020 AGI >= 160k. My marginal tax rate on that income (from 150k to 160k AGI) is 127% (including 98% phase-out + 24% federal + 7% state).

[stvyreb]

so are the $1400 checks taxable? I'm not really even sure what you guys are talking about, nor really understand the website referenced.

my OP was mostly about the ACA, I'm wondering if the bill now includes some changes to what my my APTC were vs "my share" maybe they will produce a new 1095-A form that I would use instead ?

Shall I wait till April 1 to file, or just file and amend before April 15 , etc

[sycamore]

so are the $1400 checks taxable?

The stimulus checks (all 3 sets) are NOT considered taxable income.

[PharmerBrown]

Single filer here with no dependents.

My AGI in 2020 was over 75K, however in 2019 it was below this treshold. I have not filed my 2020 taxes yet in anticipation of this. Now that the bill is law, any issues with filing my taxes now or would it be best to wait until the $1,400 payment has been received.

Wait until the $1.4k is in hand. File an extension if needed. It'll cost you $1.4k if you do so early: https://frugalprofessor.com/stimulus-ro ... hase-outs/

Filing early would be particularly harmful for those with many kids whose 2019 AGI <= $150k & 2020 AGI >= 160k. My marginal tax rate on that income (from 150k to 160k AGI) is 127% (including 98% phase-out + 24% federal + 7% state).

I have 3 kids and fall into the phase out range. I'll pay almost 100% marginal rate for this stimulus, but much higher when you factor in the other two stimulus payments. They each add an additional 5% penalty on those dollars. I know I shouldn't complain but......

[clemrick]

so are the $1400 checks taxable? I'm not really even sure what you guys are talking about, nor really understand the website referenced.

my OP was mostly about the ACA, I'm wondering if the bill now includes some changes to what my my APTC were vs "my share" maybe they will produce a new 1095-A form that I would use instead ?

Shall I wait till April 1 to file, or just file and amend before April 15 , etc

Wait until April 1. The IRS and tax software people have to figure out what to do with the new legislation. If you file now, wait until your return is processed before amending it. You have three years to amend it, so no rush.

[LadyGeek]

FYI - The IRS website has been updated for the 2021 stimulus payment. See: Get My Payment

My payment is based on my 2020 return. It was easy for me to tell, as the site supplied the last 4 digits of my direct deposit account number. I used a different account number for my 2019 return.

[stvyreb]

so are the $1400 checks taxable? I'm not really even sure what you guys are talking about, nor really understand the website referenced.

my OP was mostly about the ACA, I'm wondering if the bill now includes some changes to what my my APTC were vs "my share" maybe they will produce a new 1095-A form that I would use instead ?

Shall I wait till April 1 to file, or just file and amend before April 15 , etc

Wait until April 1. The IRS and tax software people have to figure out what to do with the new legislation. If you file now, wait until your return is processed before amending it. You have three years to amend it, so no rush.

are you saying this in regards to the ACA APTC changes or ?

'cause if I already know the $1400 is Not taxable, I don't understand why anyone is talking about "phase-outs" etc, though I guess it's fine if my OP question extends to other/all parts of the ARP (legislation changes)..

[michaeljc70]

The change for the 2020 ACA PTC means that if you said your income was $20k and got a premium credit based on that and your actual income was $60k you don't have to pay back the credit. If your income was what you put in the application or lower in 2020, this will not help you. At least that is my understanding of it. For 2021 and 2022 it is different.

[earlyout]

FYI - The IRS website has been updated for the 2021 stimulus payment. See: Get My Payment

My payment is based on my 2020 return. It was easy for me to tell, as the site supplied the last 4 digits of my direct deposit account number. I used a different account number for my 2019 return.

The site gives the planned date for the deposit but does not give the amount of the stimulus payment.

[stvyreb]

The change for the 2020 ACA PTC means that if you said your income was $20k and got a premium credit based on that and your actual income was $60k you don't have to pay back the credit. If your income was what you put in the application or lower in 2020, this will not help you. At least that is my understanding of it. For 2021 and 2022 it is different.

in my case I think I overestimated my actual MAGI(cause I deferred the 2020 RMD), so maybe that means there is not reason to wait till April 1, if that is the only Tax Change for 2020 tax year ?

[michaeljc70]

The change for the 2020 ACA PTC means that if you said your income was $20k and got a premium credit based on that and your actual income was $60k you don't have to pay back the credit. If your income was what you put in the application or lower in 2020, this will not help you. At least that is my understanding of it. For 2021 and 2022 it is different.

in my case I think I overestimated my actual MAGI(cause I deferred the 2020 RMD), so maybe that means there is not reason to wait till April 1, if that is the only Tax Change for 2020 tax year ?

It is not the only tax change for 2020. It is the only tax change directly relating to the ACA PTC though. If you didn't get advance PTCs and received unemployment benefits the exclusion of some unemployment benefits could increase your PTC at reconciliation on your tax return.

[stvyreb]

sort of makes sense, re-reading it now
--
*ACA Marketplace Plans*

The /American Rescue Plan/ also significantly reduces premiums for ACA
marketplace plans for 2021 and 2022.

* It increases premium tax credits, which will eliminate or reduce premiums
for most current marketplace enrollees.
* It also ensures that no marketplace enrollee, regardless of income, will
spend more than 8.5 percent of their income on premiums.
* In addition, the /American Rescue Plan/ exempts low- and moderate-income
families from having to repay the premium tax credit they received in 2020.
This will protect people who experienced unexpected changes in income in
2020 from having high repayments when filing their taxes.
* The /American Rescue Plan/ also includes protections for people who have
recently lost their jobs. It guarantees that people who receive
unemployment benefits in 2021 receive the most generous premium tax credits
if they enroll in an ACA marketplace plan.
--

so maybe after April 1st, for tax year 2021 APTC, I'm supposed to logon to healthcare.gov and do something to get a lower immediate premium ?

[DetroitRick]

For the 2021 and 2022 advance premium tax credit issue (I understand this thread started with 2020, 1040 issue), until more recent info comes along in coming days, this statement from Centers for Medicare and Medicaid Services (responsible for ACA) might be of value. It's, recent, from Friday March 12:

https://www.cms.gov/newsroom/fact-sheet ... arketplace

They start by saying this, referring to the APTC, which is a bit ridiculous (the reselect plan part):
"Current enrollees, including those who recently enrolled through the 2021 Special Enrollment Period, can update their applications and enrollments in order to get new eligibility results starting April 1. You will need to reselect your current plan in order for the changes to take effect to reduce your premiums for the remainder of the year."

But more logically, they then finish this release with this statement:
"However, we are also exploring whether tax credits can be updated on behalf of consumers during 2021."

[michaeljc70]

On the IRS website it says you don't need to file an amended return if you paid back ACA PTC. Fine. What if you haven't filed yet? Do I have to send a check for ~$5k only to wait to get it back later? I will owe an underpayment penalty so I'd rather not wait until May 17th to file.

[snowman]

On the IRS website it says you don't need to file an amended return if you paid back ACA PTC. Fine. What if you haven't filed yet? Do I have to send a check for ~$5k only to wait to get it back later? I will owe an underpayment penalty so I'd rather not wait until May 17th to file.

HRB updated their software today (4-6-21) which fixed ACA repayment issue. I have no idea what else was in this update, but this was the only one I was waiting for.

[michaeljc70]

On the IRS website it says you don't need to file an amended return if you paid back ACA PTC. Fine. What if you haven't filed yet? Do I have to send a check for ~$5k only to wait to get it back later? I will owe an underpayment penalty so I'd rather not wait until May 17th to file.

HRB updated their software today (4-6-21) which fixed ACA repayment issue. I have no idea what else was in this update, but this was the only one I was waiting for.

Interesting. I checked this morning and HRB said next update 4/8. I'll check again.

[OkanePlease]

snowman, were you over the cliff and now not required to repay the APTC? That's my situation, and Intuit insists that they've completed software updates (that don't include elimination of the clawback) UNLESS the IRS provides different guidance.

On the IRS website it says you don't need to file an amended return if you paid back ACA PTC. Fine. What if you haven't filed yet? Do I have to send a check for ~$5k only to wait to get it back later? I will owe an underpayment penalty so I'd rather not wait until May 17th to file.

HRB updated their software today (4-6-21) which fixed ACA repayment issue. I have no idea what else was in this update, but this was the only one I was waiting for.

[snowman]

snowman, were you over the cliff and now not required to repay the APTC? That's my situation, and Intuit insists that they've completed software updates (that don't include elimination of the clawback) UNLESS the IRS provides different guidance.

On the IRS website it says you don't need to file an amended return if you paid back ACA PTC. Fine. What if you haven't filed yet? Do I have to send a check for ~$5k only to wait to get it back later? I will owe an underpayment penalty so I'd rather not wait until May 17th to file.

HRB updated their software today (4-6-21) which fixed ACA repayment issue. I have no idea what else was in this update, but this was the only one I was waiting for.

No, I wasn't over the cliff, but our income turned out to be higher than estimated. Same thing though from the tax perspective. You even get the message at the end of the interview (which I don't know how to copy here) that thanks to American Rescue Plan Act, you don't have to pay any advanced credit back.

The way HRB deals with it is that it keeps Form 8962 same as in previous years (including payback amount), but that number does not carry on line 2 of Schedule 2. They left it blank vs. whatever the payback amount is on 8962.

Hope this helps. I would think TT will release similar update soon. Good luck!

[OkanePlease]

Thanks, snowman. TurboTax does as you describe for those not over the cliff, but Intuit's yet to recognize that clawback forgiveness pertains to ALL people who got APTCs, even if over the cliff.

snowman, were you over the cliff and now not required to repay the APTC? That's my situation, and Intuit insists that they've completed software updates (that don't include elimination of the clawback) UNLESS the IRS provides different guidance.

On the IRS website it says you don't need to file an amended return if you paid back ACA PTC. Fine. What if you haven't filed yet? Do I have to send a check for ~$5k only to wait to get it back later? I will owe an underpayment penalty so I'd rather not wait until May 17th to file.

HRB updated their software today (4-6-21) which fixed ACA repayment issue. I have no idea what else was in this update, but this was the only one I was waiting for.

No, I wasn't over the cliff, but our income turned out to be higher than estimated. Same thing though from the tax perspective. You even get the message at the end of the interview (which I don't know how to copy here) that thanks to American Rescue Plan Act, you don't have to pay any advanced credit back.

The way HRB deals with it is that it keeps Form 8962 same as in previous years (including payback amount), but that number does not carry on line 2 of Schedule 2. They left it blank vs. whatever the payback amount is on 8962.

Hope this helps. I would think TT will release similar update soon. Good luck!

[snowman]

Thanks, snowman. TurboTax does as you describe for those not over the cliff, but Intuit's yet to recognize that clawback forgiveness pertains to ALL people who got APTCs, even if over the cliff.

That's interesting. I just went back and increased my income way over the cliff, and HRB handled it exactly as before - no repayment. It makes sense, since 8962 is no longer part of the tax return, according to HRB. I assume that's the guidance they received from IRS, which should then also apply to TT.

[michaeljc70]

I am wondering where they (HRB) are getting that information from. I would think it would be public if it came from the IRS since not everyone uses TT/HRB. The only thing I can find on irs.gov pertaining to this is:

We’re reviewing the tax provisions of the American Rescue Plan Act of 2021, signed into law on March 11, 2021. Taxpayers who filed a 2020 tax return and reported an excess advance premium tax credit repayment on Line 29 of Form 8962, Premium Tax Credit, should not file an amended tax return only to get a refund of this amount. The IRS will provide more details soon. For the latest updates, check IRS.gov/coronavirus.

[OkanePlease]

I'm interested in knowing this as well. Seems like I have to switch to HRB if Intuit/TurboTax is unwilling to update its software.

I am wondering where they (HRB) are getting that information from. I would think it would be public if it came from the IRS since not everyone uses TT/HRB. The only thing I can find on irs.gov pertaining to this is:

We’re reviewing the tax provisions of the American Rescue Plan Act of 2021, signed into law on March 11, 2021. Taxpayers who filed a 2020 tax return and reported an excess advance premium tax credit repayment on Line 29 of Form 8962, Premium Tax Credit, should not file an amended tax return only to get a refund of this amount. The IRS will provide more details soon. For the latest updates, check IRS.gov/coronavirus.

[DetroitRick]

TurboTax pushed out that update this morning. At least for Desktop Premier, probably for all versions.

The weird thing is that, while the tax calculations for this issue are now correct (no payback of the premium tax credits), Form 8962 is removed from their e-filing form set. That reconciliation form is there (in "forms" view), and properly completed, but it is not filed. Where yesterday, it WAS in their e-filing set. So it worries me because Healthcare.gov still says that Form 8962 submission is required with your 2020 tax return (website, as of today).

Spent an hour with TurboTax support and was instructed to:
1)remove and re-enter 1095A form (the source of 8962 data). Result, no change. Form 8962 is still gone from their e-filing form set.
2)don't worry about it, just wait for the IRS to send a letter. Sure, that's why I use TurboTax...
3)Call the IRS and ask if they changed the e-filing form requirement. I had already researched extensively on their website. What fun....[/list]
At least they didn't suggest reinstalling Windows or changing ISP, but I digress.

Snowman's comment above, makes me wonder. The comment about being told by H&R Block that 8962 is not part of the filing package. But you would think TurboTax second level support would get this kind of info. Or Healthcare.gov would update their instruction. Or IRS would have a statement.

Anybody know if H&R Block still includes the 8962 in it's efiling package?

[OkanePlease]

Same scenario with the Deluxe version, DetroitRick. I just love the way Intuit does stuff without explanation/communication.

Unless something changes soon, I intend to file as things stand now, under the assumption that the IRS doesn't need to see Form 8962.

TurboTax pushed out that update this morning. At least for Desktop Premier, probably for all versions.

The weird thing is that, while the tax calculations for this issue are now correct (no payback of the premium tax credits), Form 8962 is removed from their e-filing form set. That reconciliation form is there (in "forms" view), and properly completed, but it is not filed. Where yesterday, it WAS in their e-filing set. So it worries me because Healthcare.gov still says that Form 8962 submission is required with your 2020 tax return (website, as of today).

Spent an hour with TurboTax support and was instructed to:
1)remove and re-enter 1095A form (the source of 8962 data). Result, no change. Form 8962 is still gone from their e-filing form set.
2)don't worry about it, just wait for the IRS to send a letter. Sure, that's why I use TurboTax...
3)Call the IRS and ask if they changed the e-filing form requirement. I had already researched extensively on their website. What fun....[/list]
At least they didn't suggest reinstalling Windows or changing ISP, but I digress.

Snowman's comment above, makes me wonder. The comment about being told by H&R Block that 8962 is not part of the filing package. But you would think TurboTax second level support would get this kind of info. Or Healthcare.gov would update their instruction. Or IRS would have a statement.

Anybody know if H&R Block still includes the 8962 in it's efiling package?

[snowman]

TurboTax pushed out that update this morning. At least for Desktop Premier, probably for all versions.

The weird thing is that, while the tax calculations for this issue are now correct (no payback of the premium tax credits), Form 8962 is removed from their e-filing form set. That reconciliation form is there (in "forms" view), and properly completed, but it is not filed. Where yesterday, it WAS in their e-filing set. So it worries me because Healthcare.gov still says that Form 8962 submission is required with your 2020 tax return (website, as of today).

Spent an hour with TurboTax support and was instructed to:
1)remove and re-enter 1095A form (the source of 8962 data). Result, no change. Form 8962 is still gone from their e-filing form set.
2)don't worry about it, just wait for the IRS to send a letter. Sure, that's why I use TurboTax...
3)Call the IRS and ask if they changed the e-filing form requirement. I had already researched extensively on their website. What fun....[/list]
At least they didn't suggest reinstalling Windows or changing ISP, but I digress.

Snowman's comment above, makes me wonder. The comment about being told by H&R Block that 8962 is not part of the filing package. But you would think TurboTax second level support would get this kind of info. Or Healthcare.gov would update their instruction. Or IRS would have a statement.

Anybody know if H&R Block still includes the 8962 in it's efiling package?

So TT is handling it the same way as HRB. Where is the problem? Are you worried that tax return won't be accepted by IRS?

I played with it some more, creating dummy returns just out of curiosity. When I increased my income substantially and needed to repay tax credit back, the form 8962 was not included in the filing package. When I lowered my income so that APTC was lower than it was supposed to be, the form 8962 is included. Which makes sense as that's the only way to claim that refund.

Again - where is the problem? Seems to be working properly. It's the cleanest way to comply with the new law IMO. The alternative would be to change 8962, which would make no sense this late in the game. Or let people file, then wait for the refund god knows how long. Or make people file amended return. This makes sense to me.

[DetroitRick]

So TT is handling it the same way as HRB. Where is the problem? Are you worried that tax return won't be accepted by IRS?

I played with it some more, creating dummy returns just out of curiosity. When I increased my income substantially and needed to repay tax credit back, the form 8962 was not included in the filing package. When I lowered my income so that APTC was lower than it was supposed to be, the form 8962 is included. Which makes sense as that's the only way to claim that refund.

Again - where is the problem? Seems to be working properly. It's the cleanest way to comply with the new law IMO. The alternative would be to change 8962, which would make no sense this late in the game. Or let people file, then wait for the refund god knows how long. Or make people file amended return. This makes sense to me.

The problem lies only in the fact that Healthcare.gov requires the reconciliation that 8962 provides. It requires it specifically in order for users to continue receiving future tax credits. While their website is thoroughly updated for all American Rescue Act changes - not addressing this makes me think that they still might require it. So not submitting MIGHT be a big problem - which is why I ask. Easier to ask now than scramble later. I don't think TurboTax coded this on whim - I'm trying to find out if the reg. changed.

Sure, they (Healthcare.gov) may wave the requirement for 2020 submission, but I lack the esp talents to know, and that seemed like a very simple piece of info to provide. The second possibility is that the IRS could request it later and then I would just mail in the forms and pray they get processed within a year (the IRS has a huge paper backlog, but let's be optimistic, right?). The third possibility is that Healthcare.gov simply designs a new way to get that form for 2020. So, just askin'...

[DetroitRick]

Same scenario with the Deluxe version, DetroitRick. I just love the way Intuit does stuff without explanation/communication.

Unless something changes soon, I intend to file as things stand now, under the assumption that the IRS doesn't need to see Form 8962.

Thanks, that's helpful. It tells me there are no settings or selections that I made to suppress the form after the update. Others are now starting to post similarly in the TT community, so perhaps a clarification will come soon. I'll likely file as-is too, but will wait a week to see how it washes out.

[DetroitRick]

In the unlikely event anybody is still following this, a formal outline of the repayment suspension and the need to file Form 8962 was published by the IRS yesterday in IR-2021-84 (April 9, 2021).

Lots of detail in this one-page announcement, but basically:
Form 8962 is not required for 2020 only, unless a net premium tax credit is being claimed
The IRS will process tax returns without Form 8962 for tax year 2020
It also covers details for those who filed already

Link:
https://www.irs.gov/newsroom/irs-suspen ... -form-8962

So TurboTax's update yesterday was correct. They just couldn't say why that 8962 form requirement was dropped. I stumbled on this via Drake Software's comments on why THEY dropped the form from e-filing. Presumably healthcare.gov and state exchanges will roll with this, but I can only guess.

[Nyc10036]

In the unlikely event anybody is still following this, a formal outline of the repayment suspension and the need to file Form 8962 was published by the IRS yesterday in IR-2021-84 (April 9, 2021).

Lots of detail in this one-page announcement, but basically:
Form 8962 is not required for 2020 only, unless a net premium tax credit is being claimed
The IRS will process tax returns without Form 8962 for tax year 2020
It also covers details for those who filed already

Link:
https://www.irs.gov/newsroom/irs-suspen ... -form-8962

So TurboTax's update yesterday was correct. They just couldn't say why that 8962 form requirement was dropped. I stumbled on this via Drake Software's comments on why THEY dropped the form from e-filing. Presumably healthcare.gov and state exchanges will roll with this, but I can only guess.

I am still following this.
Thank you.
This is the last thing I need before I can file my taxes.

.

[OkanePlease]

I appreciate the link as well!

In the unlikely event anybody is still following this, a formal outline of the repayment suspension and the need to file Form 8962 was published by the IRS yesterday in IR-2021-84 (April 9, 2021).

Lots of detail in this one-page announcement, but basically:
Form 8962 is not required for 2020 only, unless a net premium tax credit is being claimed
The IRS will process tax returns without Form 8962 for tax year 2020
It also covers details for those who filed already

Link:
https://www.irs.gov/newsroom/irs-suspen ... -form-8962

So TurboTax's update yesterday was correct. They just couldn't say why that 8962 form requirement was dropped. I stumbled on this via Drake Software's comments on why THEY dropped the form from e-filing. Presumably healthcare.gov and state exchanges will roll with this, but I can only guess.