The HCTC is a refundable credit of a percentage of qualified health insurance coverage payments available to qualified taxpayers. Eligibility for the health coverage tax credit is determined on a per-month basis. Form 8885 provides eligibility information and computes the credit based on premiums paid for health insurance coverage.
Taxpayers can either sign up with the Treasury department and pay 20% of the health insurance premium monthly while the IRS pays the remaining 80% directly to the insurance company, or the taxpayer can pay 100% of the health insurance premiums and use Form 8885 to claim the credit on their annual income tax return.
From the Main Menu of the Tax Return (Form 1040) select:
- Payments, Estimates, EIC
- Health Coverage Tax Credit