Your estimated income for the year is reconciled when you file your taxes for the previous year. If you have overestimated your income, you will receive a tax credit based on your AGI (adjusted gross income). If you stated your household income would be $40,000 for the year, but you ended up with a household income of $25,000 for the previous year you would receive a tax credit. The credit would be the difference you would have received based on $25,000 in household income. If your tax credit would have been $500.00 a month based on $25,000 in income, but you received a tax credit of $150.00 based on $40,000 of estimated income, you would receive the difference back when you file your income taxes. In this example the tax filer would receive $350.00 in tax credit for every month he had a subsidized health plan. The opposite holds true if you underestimated your taxes for the previous year. In the case above, the tax filer would have to pay back the $350.00 for every month that he had received a subsidy. However, there is a limit (Subsidy-Payback Limits) to the amount that you would have to pay back as long as your income is below 400% of the federal poverty level. It is important to understand that if your income exceeds 400% of the Federal Poverty Level your household will not qualify for a tax credit. If you underestimated your income and you received a subsidy, when you file your taxes you will have to pay the entire amount of the subsidy back if your income exceeds the 400% rule. The following tables explains the limits on repayment amounts if your income is below 400% of the national poverty level. See attached- Subsidy-Repayment Limits. The following table shows Federal Poverty Levels based on household size. See attached- Federal Poverty Level-2016. For more information visit our website.
Please Share and Like us.