Taxes and the New Healthcare Law
Starting last year, millions of people were able to purchase health insurance through the Federal or State-based exchanges authorized by the Affordable Care Act. The affordability of insurance coverage was supported through Advance Premium Tax Credits (APTC). This means that a portion of taxpayer’s anticipated refund was given in advance to the taxpayer in the form of a reduced insurance premium. The APTC reduces the monthly out-of-pocket cost of the insurance premium for the consumer.
The tax credit is given in advance based on estimated annual income. At tax filing time, you must reconcile the amount of income actually received with the amount of Advance Premium Tax Credits received over the tax year for which you are filing.
This is new to consumers and the Internal Revenue Service has developed a set of materials that includes a glossary to help consumers understand and navigate this new filing requirement. Visit the Internal Revenue Site for Publication 5187.