Excess health insurance premium assistance credit - KPMG Global
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Excess health insurance premium assistance credit, increase in tax

Excess health insurance premium assistance credit

The U.S. Tax Court today issued an opinion finding that individual taxpayers who received an excess advance premium tax credit—a credit that they ultimately were not entitled to receive—for assistance in obtaining health insurance realized an increase in their tax liability, in the amount of the later disallowed credit.


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The case is: McGuire v. Commissioner, 149 T.C. No. 9 (August 28, 2017). Read the Tax Court’s opinion [PDF 92 KB]


  • The taxpayers (a married couple) in 2014 received an advance premium tax credit under the Affordable Care Act. The credit was paid directly to a health insurance provider, to reduce the amount of the premium to be paid by the taxpayers.
  • Because of a change in financial circumstances (when the wife started to work), the taxpayers ultimately were not entitled to the premium tax credit because their household income exceeded the federal poverty line.
  • After the close of the tax year, the taxpayers did not receive a Form 1095-A, Health Insurance Marketplace Statement
  • The taxpayers did not report the excess tax credit as an increase to tax on their return.

The Tax Court today found that the excess premium assistance credit was an increase in the tax imposed, and that in this case, the taxpayers received an advance of a credit to which they ultimately were not entitled. As the court held, excess advance premium tax credits are to be treated as an increase in the tax imposed. The court, nevertheless, found that the taxpayers were are not liable for an accuracy-related penalty.

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