Folks getting an advance credit for buying health coverage on an exchange: Make sure you qualify for the break or you may be in for a nasty surprise. When a couple purchased insurance through an exchange run by the state of Calif., they elected to have the health premium tax credit reduce their monthly premiums. Their tax return for the year showed modified adjusted gross income of $75,199, which exceeded the $62,040 maximum to qualify for the credit for a family of two. They now have to repay the excess credit, even though it appears the Calif. exchange incorrectly told them that they’re eligible for it (Walker, TC Summ. Op. 2017-50).
Tax pros foresee more cases of erroneous health premium credit returns. That’s because IRS is sure to have a computer system to flag tax returns of taxpayers who have modified adjusted gross incomes above the eligible limit to claim the break.