Starting in 2014, Taxpayers may be eligible for the Premium Tax Credit if they purchase health insurance through the Health Insurance Market Place

Per the IRS, "starting in 2014, if you get your health insurance coverage through the Health Insurance Marketplace, you may be eligible for the Premium Tax Credit. This tax credit can help make purchasing health insurance coverage more affordable for people with moderate incomes. The open enrollment period to purchase health insurance coverage for 2014 through the Marketplace runs from Oct. 1, 2013, through March 31, 2014.

The Department of Health and Human Services administers the requirements for the Marketplace and the health plans they offer. For more information about your coverage options, financial assistance and the Marketplace, visit HealthCare.gov."

1. Eligibility

In general, a taxpayer may be eligible for the credit if they meet all of the following:

1) Buy health insurance through the Marketplace;

2) Are ineligible for coverage through an employer or a government plan;

3) Are within certain income limits;

4) File a joint return, if married; and cannot be claimed as a dependent by another person.

If the taxpayers are eligible for the tax credit, they can choose to:

a) Get It Now: 

They can have some or all of the estimated credit paid in advance directly to your insurance company to lower what is paid out-of-pocket for their monthly premiums during 2014; or

b) Get It Later: 

Taxpayers can also wait to get all of the credit when they file their 2014 tax return in 2015.

2. Getting the Credit

To qualify for the credit, the taxpayer must get insurance through the Marketplace. During enrollment through the Marketplace, the Marketplace will estimate the amount of the Premium Tax Credit a taxpayer will be able to claim for the 2014 tax year that will be filed in 2015. Taxpayers will then be able to decide whether you want to have all, some or none of your estimated credit paid in advance directly to their insurance company.

3. Change in Circumstances

Report income and family size changes to the Marketplace throughout the year. Reporting changes will help make sure you get the proper type and amount of financial assistance and will help you avoid getting too much or too little in advance. Receiving too much or too little in advance can affect your refund or balance due when you file your 2014 tax return in 2015. For example, if the taxpayer does not report income or family size changes to the Marketplace when they happen in 2014, the advance payments may not match the actual qualified credit amount on their federal tax return that will be filed in 2015. This might result in a smaller refund or balance due.

4. Claiming the Credit on Your Federal Tax Return

For any tax year, if the taxpayers receives advance credit payments in any amount or if they plan to claim the premium tax credit, the taxpayer must file a federal income tax return for that year. 

a) If the taxpayers choose to get it now: 

When the taxpayer files your 2014 tax return in 2015, the taxpayer will subtract the total advance payments received during the year from the amount of the Premium Tax Credit calculated on your tax return. If the Premium Tax Credit computed on the return is more than the advance payments made on your behalf during the year, the difference will increase your refund or lower the amount of tax the taxpayer owes. If the advance credit payments are more than the Premium Tax Credit, the difference will increase the amount owed and result in either a smaller refund or a balance due.

b) If the taxpayer choose's to get it later: 

The Taxpayer will claim the full amount of the Premium Tax Credit when filing the 2014 tax return in 2015. This will either increase the taxpayer's refund or lower the balance due.

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