Advance Premium Tax Credit (APTC) received in excess of what the taxpayer is allowed generally needs to be repaid. If a taxpayer got married during the tax year and their new "tax family" includes an individual with marketplace health insurance who received APTC, an optional calculation on Form 8962, the Alternative Calculation for Year of Marriage, can be elected that may reduce the amount of excess APTC to be repaid.
Overview of the Alternative Calculation for Year of Marriage
The specific purpose of the alternative calculation is to determine the alternative monthly contribution amount, the amount of the taxpayer's or spouse's household income they would be responsible for paying as their share of premiums each month if they enrolled in the applicable "second lowest cost silver plan" (SLCSP).
While a tax return with household income that exceeds 400% of the poverty line is eligible to elect to use the alternative calculation, in a tax return with household income that is less than or equal to 400% of the poverty line, eligibility is determined by completing Worksheet 3 in the Form 8962 instructions. Worksheet 3 is used to determine if excess PTC was paid in advance, and if there is no excess PTC, the alternative calculation isn't needed.
Once you've determined the taxpayers can use the alternative calculation, the alternative monthly contribution amount is determined using three or five worksheets in Publication 974 (the number varying depending on who had marketplace insurance prior to marriage, whether the taxpayer, the spouse, or both).
Eligibility to make the election
To be eligible to make the election:
- The taxpayer and spouse were unmarried at the beginning of the year, were married at the end of the year, and are filing a joint return, and
- Someone in the tax family was enrolled in a qualifying health plan before the taxpayer and spouse's first full calendar month of marriage and APTC was received during the year, and
- More APTC was paid during the year than should have been paid, as calculated in Worksheet 3 found in the Form 8962 instructions.
Coordinating with the Shared Policy Allocation
If the tax return includes the taxpayer and/or the spouse sharing their marketplace policy with one or more other taxpayers, you will first need to determine their share of the policy and make those entries in Form 8962 Part IV. See here for more information about how to enter a shared policy allocation in TaxSlayer Pro.
First step: Determine if there is Advance PTC to be repaid
The first step is to determine if the taxpayer and spouse have excess PTC to be repaid. To do this, enter the Form 1095-A(s) in Form 8962 without selecting the alternative calculation. You'll need to enter the amounts for all months, January through December, as appropriate, since the alternative calculation doesn't allow for entering the annual totals.
If you're not familiar with entering Form 1095-A in a tax return in TaxSlayer Pro, see here for more information.
When done, click the View button in the toolbar to print Form 8962. Examine Part III. If it shows an amount to be repaid, the taxpayer is eligible to elect to use the alternative calculation. Keep this PDF copy of the form handy, as you'll need it to complete Part V later.
Determining the Form 8962 Part V entries
Complete the steps covered below, as outlined in Publication 974. These steps will produce the numbers and dollar amounts needed for Form 8962 Part V, Alternative Calculation for Year of Marriage.
Note that Form 8962 Part V consists of two lines, one for the primary taxpayer and one for the spouse. You will make entries in Part V for whoever had marketplace insurance prior to marriage, whether the taxpayer, the spouse, or both.
- Determine for both the taxpayer and the spouse their "alternative family size". The alternative family size for the taxpayer and the spouse is the size of each family prior to marriage. If there are no dependents, then the alternative family size for each is 1. Otherwise dependents are added to the alternative family size for whichever family they resided in prior to marriage. (In an unusual situation, it's possible for an individual to qualify to be a dependent of either family, so just include them in one or the other.) The sum of the two alternative family sizes will equal the tax family size in the return, i.e., the number on Form 8962 line 1.
- If someone in the primary taxpayer's family was covered under a marketplace plan for the month they got married and prior, do the following:
- Determine the taxpayer's alternative monthly contribution amount by completing Worksheet I Lines 1 through 7 in Publication 974.
- Also in Worksheet I, determine the taxpayer's "alternative start month" (their first month with someone in their family on marketplace insurance) and their "alternative stop month" (the earlier of (a) the last month with someone in their family on marketplace insurance or (b) the month they got married).
- Complete Worksheet II in Publication 974. You'll need this to complete Worksheet V.
- If someone in the spouse's family was covered under a marketplace plan for the month they got married and prior, do the following:
- Determine the spouse's monthly contribution by completing Worksheet III Lines 1 through 7 in Publication 974.
- Also in Worksheet III, determine the spouse's "alternative start month" (their first month with someone in their family on marketplace insurance) and their "alternative stop month" (the earlier of (a) the last month with someone in their family on marketplace insurance or (b) the month they got married).
- Complete Worksheet IV in Publication 974. You'll need this to complete Worksheet V.
- Complete Worksheet V in Publication 974 as follows:
- Column A - Complete column A only for the months you have entries in column E of Worksheet II and/or Worksheet IV. Leave column A blank for all other months. Add the amounts in column E of Worksheets II and IV separately for each month and enter the total in column A on the line for the same month.
- Column B - Complete column B for any month you have an entry in column A using the copy of Form 8962 you printed earlier. For each month, enter the corresponding amount from Form 8962 lines 12 through 23 column (e).
- Examine Worksheet V line 13. If line 13 column A is greater than column B, the alternative calculation will reduce the excess PTC in the return. Proceed to the section below to enter in the tax return the amounts in Form 8962 Part V. If line 13 column B is greater than column A, the alternative calculation doesn't reduce excess PTC, so it shouldn't be used.
Entries in the tax return
When using an alternative calculation in Form 8962, you cannot enter annual totals in Part II; you must enter each of the three columns for each month.
To elect the Alternative Calculation for Year of Marriage in TaxSlayer Pro, in the tax return select:
- Payments, Estimates & EIC
- Premium Tax Credit (PTC) (8962)
- Allocating Policy Amounts with Another Taxpayer - Check the box next to Alternative Calculation for Year of Marriage, then select OK.
- Alternative Calculation for Year of Marriage (Form 8962 Part 5) - Enter for the taxpayer and/or the spouse (whoever had marketplace insurance prior to marriage), their alternative family size, their monthly contribution, and their alternative start and stop months as determined following the steps in Publication 974 outlined above. The taxpayer's info comes from Worksheet I (if completed), while the spouse's info comes from Worksheet III (if completed).
Note: This is a guide to entering information for the Alternative Year of Marriage Calculation in the TaxSlayer Pro program. It is not intended as tax advice. Due to the complexity of the calculation, you will need to read the IRS instructions under Additional Information below.
Additional Information
IRS: Publication 974: Premium Tax Credit (PTC)
Desktop: Form 1095-A – Health Insurance Marketplace Statement