Keep your tax credits and carry on. That was the outcome of the Supreme Court decision in June regarding the health insurance premium tax credit. This federal income tax credit was created by the health insurance laws passed in 2010. The rules for claiming the credit have not changed, and the credit is still available in every state.
How it works. The premium tax credit is an advanceable, refundable federal income tax credit that you can use to offset some of the cost of a health insurance policy. To claim it, you must buy a policy through the health insurance marketplace and have income that falls within certain limits. Other rules include filing a joint return if you’re married and not being a dependent on someone else’s return.
You can receive the credit in advance as a reduction in your health insurance premium. If you choose this option, the money will be sent to your insurer as you pay your monthly premiums. Next April, when you file your federal income tax return for 2015, you’ll reconcile the amount of the advance credit with the amount you’re actually eligible to receive. The difference will affect the tax on your return.
As before, the credit you’re eligible to receive is based on your income and family size. If your financial situation changes after you begin receiving the credit, updating the calculation can prevent surprises at tax time. Please give us a call for help in making sure you’re claiming the right amount.