How many have received an IRS letter 12C about a missing Form 8962 on their tax return?

The IRS uses LTR 12C (see upper right corner of your letter) to request Form 8962, Premium Tax Credit. It’s required when someone on your tax return had health insurance through Healthcare.gov (or a state Marketplace) and took the Advance Premium Tax Credit to lower their monthly premium. Form 8962 is created by entering your Form 1095-A (received from your Marketplace) in Tax Software.

Understanding Your Advance Payments of the Premium Tax Credit Letter

This post can help you enter your 1095-A in your Tax software and create (or correct) Form 8962. You’ll also be able to review an updated page 2 of your 1040 or 1040A for any change to your refund amount or the amount of tax you owe.

It’s important to remember the following:

• Read the details of your IRS letter carefully and follow the instructions provided in it.
• Only print and send the forms requested by the IRS in your letter.
• You won’t be completing or sending a Form 1040X (amended tax return) to the IRS.

Understanding your IRS Letter 12C

Requesting information to reconcile Advance Payments of the Premium Tax Credit

Reasons why you could be receiving this letter?

• 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 2018 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 2018 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 carry forward amounts from a Form 8962.
• You should have received a Form 1095-A from your Marketplace on or before January 31, 2019. 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 they receive the requested information, they’ll use it to process your original tax return.
• If you’re entitled to a refund after reconciling your advance payments, the IRS will finish processing and send your refund about 6-8 weeks after they receive all of the necessary information.

How can we respond to the letter?

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.

Who can we contact?

• 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.

Where can I get form 8962?

• Download a copy of Form 8962 from the IRS website.
• Instructions on completing Form 8962

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 than 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 enrolled 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.