What if I underestimated my income for the year?

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.

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