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Are ACA tax credits refundable credits? I need to know for next year (2018).

Forum|Forum|7 years ago
June 1, 2019
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I will need to use the exchange for the first time next year. I have had company insurance until now. The government website calculates that I qualify for a good tax credit, but next year my income will be low enough that I won't owe taxes. I wish to know if the tax credits will do my any good.

TurboTax Business Windows

Best answer by ghost

The premium tax credit PTC is applied to the cost of any marketplace plan so it reduces your cost to enroll in a plan. If your income tax due is zero, the full credit is still available to offset the cost of healthcare insurance. The fact that you have zero income tax does not change the amount of PTC you receive. It's based on a modified adjusted gross income, not your taxable income. If you select a plan that costs less than the PTC available for your income, the PTC pays the full cost of the plan and you will forfeit the balance of the PTC. So, in that case, PTC is not fully refundable.

ghostAnswer

Employee

The premium tax credit PTC is applied to the cost of any marketplace plan so it reduces your cost to enroll in a plan. If your income tax due is zero, the full credit is still available to offset the cost of healthcare insurance. The fact that you have zero income tax does not change the amount of PTC you receive. It's based on a modified adjusted gross income, not your taxable income. If you select a plan that costs less than the PTC available for your income, the PTC pays the full cost of the plan and you will forfeit the balance of the PTC. So, in that case, PTC is not fully refundable.

T

TaxGuyBill

Employee

So yes, any additional Premium Tax Credit (credit in addition to any pre-payments to reduce your monthly insurance cost) that you qualify for is a refundable credit on your income tax return