IRS suspends requirement to repay excess advance payments of 2020 premium tax credit

Requirement to repay excess advance payments suspended

The IRS today issued a release announcing relief for taxpayers with excess advance payments of the premium tax credit for 2020.

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The American Rescue Plan Act of 2021 (Pub. L. No. 117-2) suspends the requirement that taxpayers increase their tax liability by all (or a portion of) their excess advance payments of the premium tax credit for tax year 2020. A taxpayer’s excess advance payments of the premium tax credit is the amount by which the taxpayer’s advance payments of the premium tax credit exceed the taxpayer's premium tax credit.     

Today’s IRS release—IR-2021-84 (April 9, 2021)—provides taxpayers with excess advance payments of the premium tax credit for 2020 are not required to file Form 8962, Premium Tax Credit, or to report an excess advance premium tax credit repayment on their individual income tax returns for 2020.

  • Eligible taxpayers may claim a premium tax credit for health insurance coverage in a qualified health plan purchased through a health insurance marketplace.
  • Taxpayers use Form 8962, Premium Tax Credit, to determine the amount of their premium tax credit and reconcile it with their advance payments of the premium tax credit.

The process remains unchanged for taxpayers claiming a net premium tax credit for 2020. The IRS reported that these taxpayers must file Form 8962 when they file their 2020 tax return. 

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