Updated April 9, 2021:

The announced today that taxpayers with excess APTC for 2020 are not required to file Form 8962, Premium Tax Credit, or report an excess advance premium tax credit repayment on their 2020 Form 1040 or Form 1040-SR, Schedule 2, Line 2, when they file.

The Health Insurance Marketplace, also known as Marketplace, enables eligible individuals to purchase private health insurance coverage at federally subsidized rates and obtain help with premiums and out-of-pocket costs. Individuals can choose to have the Marketplace compute an estimated credit that is paid to their insurance company thereby lowering their monthly premium payment. This is known as advance payments of the premium tax credit, or APTC.

When individuals choose to have advance payments of the premium tax credit made on their behalf, they must reconcile the amount paid in advance with the actual credit computed on their tax return by completing Form 8962, Premium Tax Credit (PTC). The credit is “refundable” because if the amount of the credit is more than the amount of the individual’s tax liability, they will receive the difference as a refund. If no income tax is owed, the individual receives the full amount of the credit as a refund. However, if advance credit payments were made to the insurance company in excess of the actual allowable credit computed on the tax return, the difference, subject to certain repayment caps, will be subtracted from the refund or added to the balance due. Thus, the difference in this case is repaid.

The American Rescue Plan Act of 2021 (ARP), signed into law on March 11, 2021, reduces health care premiums for low- and middle-income families by increasing the Affordable Care Act’s (ACA) premium tax credit (PTC) for 2021 and 2022, and eliminates the repayment requirement for taxpayers receiving excess advance premium tax credit for tax year 2020.

Taxpayers who filed a 2020 tax return and reported an excess advance premium tax credit repayment on Line 29 of Form 8962, Premium Tax Credit, should not file an amended tax return only to get a refund of this amount or contact the IRS. The IRS will reduce the excess APTC repayment amount to zero with no further action needed by you. The IRS will reimburse those who have already repaid any excess advance premium tax credit on their 2020 tax return. Taxpayers who received a letter about a missing Form 8962 should disregard the letter if they have excess APTC for 2020. The IRS will process tax returns without Form 8962 for tax year 2020 by reducing the excess advance premium tax credit repayment amount to zero.

The aforementioned changes apply to the 2020 tax return only. The IRS is still processing 2019 tax returns and you should respond to the IRS if you receive a letter about a 2019 Form 8962 to ensure the IRS can finish processing the tax return.

For more information, check https://www.irs.gov/newsroom/irs-suspends-requirement-to-repay-excess-advance-payments-of-the-2020-premium-tax-credit-those-claiming-net-premium-tax-credit-must-file-form-8962