Premium Tax Credit HI Below Poverty

[equinecpa]

I'm concerned with the PTC on a return I'm working on. HI below 100% of Federal poverty level and for that matter was last year as well.

Last year the taxpayer ended up with a PTC by checking yes to the part 1 HI below 100% of Poverty Level questions.

This year the taxpayer HI is again less than 100% of Poverty level, it seems that they can again check the box on Part 1 and receive the premium tax credit (and based on the figures they are receiving an additional PTC refund).

I can't wrap my head around this. Two years in a row they don't technically qualify yet they participate and get full credit? Has anyone run into this? It just doesn't seem right.

The question b in the HI below 100% of poverty line has me wondering "Marketplace estimated at time of enrollment that household income would be between 100% and 400% of federal poverty line for taxpayers family size for 2015" -is this information provided to the marketplace from the taxpayer or does the marketplace determine the estimated household income from prior year tax return?

Carolyn

[TaxGuyBill]

Even though it probably should have been obvious, it took me forever to figure out what "HI" meant (Household Income).


That information is provided by the taxpayer. For the first part of 2014, the Marketplace just accepted whatever the taxpayer said. Then some Marketplaces started comparing it to prior tax returns, and if the taxpayer's estimated income was noticeably different (10%?) they asked for 'proof' of the estimated income. I'm not sure, but I would think that procedure would have been used by all of the Marketplaces for all of the open enrollment for 2015.


As a side note, if the taxpayer intentionally gives false information on the Marketplace application, it could be subject to a fine of up to $250,000.