What to Do if You Get a Letter about the Premium Tax Credit

Some taxpayers will be receiving an IRS letter about the premium tax credit; this letter is also known as a 12C letter. Be sure to read your letter carefully and respond timely. Here are answers to questions you may have about this letter.

Why am I getting this letter?

The IRS sent you this letter because the Marketplace notified us that they made advance payments of the premium tax credit on your behalf to your or your family’s insurance company last year.

  • You also received this letter because – when you filed your individual 2015 tax return – you didn’t reconcile the advance payments of the premium tax credit. To reconcile, you use Form 8962, Premium Tax Credit, to compare the advance payments with the amount of your credit. Filing your tax return without including Form 8962 will delay your refund and prevent you from receiving advance credit payments in future years.

What do I need to do now?

  • You must respond to the letter, even if you disagree with the information in it. If you disagree, send the IRS a letter explaining what you think is in error.
  • If you received this letter, but didn’t enroll in health insurance through the Marketplace, you must let the IRS know.
  • The letter outlines the information you should provide in your response, which includes:
    • A copy of the Form 1095-A, Health Insurance Marketplace Statement, that your Marketplace sent earlier this year
    • A completed Form 8962
    • The second page of your tax return, which includes the “Tax and Credits” and “Payments” sections, showing the necessary corrections and your signature. You must complete either the line for “excess advance premium tax credit repayment” or the line for “net premium tax credit.”
  • If you originally filed a Form 1040EZ tax return, you must transfer the information from your Form 1040EZ to a Form 1040A and include it with your response to the 12C letter.

Is there anything else I need to know?

  • If you need your Form 1095-A, you should contact your Marketplace directly.
    • If it’s Covered CA we can do that for you, when you appoint us as your agent – here’s instructions.
  • The IRS does not issue and cannot provide that information to you.
  • Do not file a Form 1040X, Amended U.S. Individual Income Tax Return. Once you respond to the letter, the IRS uses the information you provide to process your tax return.
  • You can mail or fax your response. Be sure to include a copy of the letter with your response. Use the mailing address and fax number in the letter to respond.
  • For more information about the health care law and the premium tax credit, visit IRS.gov/aca for more information.

Tax Tip 2016-43

 

Understanding Your Letter 0012C

Requesting information to reconcile Advance Payments of the Premium Tax Credit

We are sending you this letter because:

  • the Health Insurance Marketplace notified us that they made advance payments of the premium tax credit to your or your family’s health insurance company to reduce your premium costs in 2015 and
  • you didn’t include the Form 8962, Premium Tax Credit, to reconcile the advance payments that were paid on your behalf when you filed your individual 2015 tax return.

When the Health Insurance Marketplace pays advance payments of the premium tax credit on your behalf, you must file Form 8962 to reconcile the advance payments to the actual amount of the Premium Tax Credit that you are eligible for based on your actual household income and family size. You must use the Form 1095-A, Health Insurance Marketplace Statement, sent to you from your Health Insurance Marketplace to complete Form 8962.

If you don’t reconcile:

If you don’t reconcile, you won’t be eligible for advance payments of the premium tax credit or cost-sharing reductions to help pay for your Marketplace health insurance coverage for the following calendar year.

What you need to do

  • Read your letter carefully and respond timely.
  • You must respond to the letter, even if you disagree with the information in the letter. If you disagree, send us a letter explaining what information you think is in error. If you didn’t purchase a health insurance policy from the Marketplace, you must let us know.
  • Provide the information requested in the letter. This includes:
    • a copy of your Form 1095A provided by your Marketplace,
    • a completed Form 8962
    • a copy of the corrected second page from your original return that shows the “Tax and Credits” and “Payments” sections. You must complete either the line for “excess advance premium tax credit repayment” (line 46, Form 1040, or line 29, Form 1040A) or the line for “net premium tax credit” (line 69, Form 1040, or line 45, Form 1040A).NOTE: If you originally filed a Form 1040EZ tax return, you must transfer the information from your Form 1040EZ to a Form 1040A and include it with your response. Form 1040EZ does not have the designated lines needed to carryforward amounts from a Form 8962.
  • You should have received a Form 1095-A from your Marketplace on or before January 31, 2016. If you didn’t receive your Form 1095-A, log in to your HealthCare.gov or state Marketplace account or contact your Marketplace directly. The IRS cannot answer questions about the information on your Form 1095-A, reissue missing/lost forms, or issue a corrected form.
  • Do not file a Form 1040X, Amended U.S. Individual Income Tax Return. After we receive the requested information, we’ll use it to process your original tax return.
  • If you’re entitled to a refund after reconciling your advance payments, we’ll send your refund about 6-8 weeks after we receive all of the necessary information.

How to respond

Your Letter 0012C provides a fax number, if you want to send the information by fax. If you prefer to mail your response, send the information to the address listed at the beginning of the letter. Also, include a copy of the letter with your response.

You may want to

  • Visit www.irs.gov/aca for more information about filing a tax return with Form 8962.
  • Call us at 1-866-682-7451, extension 568, if you have additional questions.

Answers to Common Questions

What are advance payments of the Premium Tax Credit?
Qualifying taxpayers who enroll in health insurance through a Marketplace can receive advance payments of the premium tax credit. The Marketplace makes advance credit payments directly to the health insurance company to reduce the out-of-pocket cost of the taxpayer’s premiums. The Marketplace determines eligibility for advance credit payments when the taxpayer enrolls or enrolls a family member in Marketplace health insurance. The Marketplace estimates the amount of premium tax credit a taxpayer will qualify for using the taxpayer’s estimated household income and family size. The estimated premium tax credit is the maximum amount of advance credit payments for which the taxpayer is eligible. The taxpayer then chooses to have all, some, or none of the advance credit payments paid to the insurance provider.

Taxpayers who receive advance credit payments must compare and reconcile their advance credit payments to the actual premium tax credit they are allowed for the year. They do this reconciliation on Form 8962.

If a taxpayer’s advance credit payments are more than his or her premium tax credit, the taxpayer must repay the excess advance credit payments (the amount of the repayment may be limited for taxpayers with household income of less than 400 percent of the federal poverty line for their family size).

If the taxpayer’s advance credit payments are less that his or her premium tax credit, the taxpayer will get the benefit of the increased tax credit.

What is the Form 1095-A?
You’ll receive a Form 1095-A when you or a family member enroll in health insurance coverage through the Health Insurance Marketplace. Form 1095-A provides the information you need to complete Form 8962. If you or your family members enrolled in the Marketplace in more than one qualified health plan policy, you’ll receive a Form 1095-A for each policy. Check the information on your Form 1095-A carefully. Please contact your Marketplace if you have questions about its accuracy. irs.gov/Individuals/Understanding-Your-Letter-0012C

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