To fill out Form 8962, you reconcile the Advance Premium Tax Credit the Marketplace already paid your insurer against the credit your final income actually earned you. You’ll pull three numbers from your Form 1095-A, calculate your household income as a percentage of the federal poverty line, apply the IRS’s contribution figure to find what you were expected to pay yourself, and then compare that credit to what was advanced. The difference either increases your refund or gets added to your tax bill. Attach the completed form to your Form 1040.
What You Need Before You Start
Three inputs drive the entire form.
The first is Form 1095-A, the Health Insurance Marketplace Statement. You should receive one by early February for each Marketplace plan that covered anyone in your household during the prior year. It reports the three figures that transfer directly onto Form 8962: your monthly enrollment premiums, the monthly premium for the Second Lowest Cost Silver Plan (SLCSP) in your area, and the monthly Advance Premium Tax Credit (APTC) paid to your insurer.1HealthCare.gov. How to Use Form 1095-A Health Insurance Marketplace Statement Don’t file until you have an accurate 1095-A. If any figure looks wrong, ask the Marketplace for a corrected version first.
The second is your household’s Modified Adjusted Gross Income (MAGI). For Premium Tax Credit purposes, MAGI is your Adjusted Gross Income from Form 1040, Line 11, plus three add-backs: untaxed foreign income, non-taxable Social Security benefits, and tax-exempt interest.2HealthCare.gov. Modified Adjusted Gross Income (MAGI) If you’re filing jointly, combine both spouses’ figures. Also add the MAGI of any dependent who is required to file a return.
The third is your household size, called your “tax family”: you, your spouse if filing jointly, and everyone you claim as a dependent. Household size sets which federal poverty line (FPL) applies. For 2025, the FPL for a single person in the 48 contiguous states is $15,650, and $32,150 for a family of four; Alaska and Hawaii have higher amounts.3HealthCare.gov. Federal Poverty Level (FPL)
Part I: Income and Contribution Amount
Part I turns your household situation into a single dollar figure: what the IRS expects you to contribute toward premiums for the year.
Line 1 is your tax family size. Lines 2a and 2b are your MAGI and your dependents’ MAGI; they add up to household income on Line 3. Line 4 asks for the applicable FPL dollar amount from the instructions for your family size and state. Line 5 divides Line 3 by Line 4 to express your household income as a percentage of the FPL.4Internal Revenue Service. Form 8962 – Premium Tax Credit
Line 7 is where you look up the applicable figure in the table in the Form 8962 instructions using your Line 5 percentage. Line 8a multiplies your household income by that figure, producing your annual expected contribution. Line 8b divides Line 8a by 12 for the monthly version. Those two numbers are what Part II uses to calculate the credit itself.5Internal Revenue Service. Instructions for Form 8962
Part II: Reconciling Advance Payments
Part II compares the credit you actually earned against what the Marketplace advanced during the year.
Line 10 asks whether you can use the simpler annual calculation on Line 11 or need to go month by month on Lines 12 through 23. Stick with the annual line only if your enrollment premium, SLCSP premium, APTC, and household composition stayed the same every month you had coverage. If your income, family size, or plan changed, or if coverage started or ended mid-year, do the monthly calculation. Common triggers are a job change, a new baby, marriage, or switching plans. Either way, transfer the SLCSP premium and APTC amounts straight from your Form 1095-A.
The reconciliation itself happens on Lines 24 through 29:
- Line 24 is your total actual Premium Tax Credit for the year.
- Line 25 is the total APTC paid to your insurer, from Form 1095-A.
- If Line 24 is larger, the difference on Line 26 is a net premium tax credit. It flows to Schedule 3 (Form 1040), Line 9, and increases your refund or reduces your tax.4Internal Revenue Service. Form 8962 – Premium Tax Credit
- If Line 25 is larger, the difference on Line 27 is excess APTC you have to repay.
- Line 28 is the repayment cap for the year, if one applies.
- Line 29 is the smaller of Line 27 or Line 28. It flows to Schedule 2 and increases your tax bill.6Internal Revenue Service. Premium Tax Credit: Claiming the Credit and Reconciling Advance Credit Payments
A Worked Example
Suppose you’re a single filer with no dependents. At enrollment you estimated income of $31,300, which is 200% of the FPL, and the Marketplace sent $548 per month ($6,576 for the year) in APTC to your insurer. Your SLCSP premium is $600 per month, or $7,200 annually.
If your final MAGI matches the projection, your Line 5 percentage is 200%, and the 2025 applicable figure at that level is 0.0200.7Internal Revenue Service. 2025 Instructions for Form 8962 Line 8a is $31,300 × 0.0200 = $626. Line 24 is $7,200 − $626 = $6,574. Line 25 is $6,576. Excess APTC on Line 27 is $2. Rounding differences like this are common.
Now say a mid-year raise pushed your actual MAGI to $39,125, or 250% of the FPL. The applicable figure at 250% is 0.0400. Line 8a becomes $39,125 × 0.0400 = $1,565. Line 24 is $7,200 − $1,565 = $5,635. Line 27 shows excess APTC of $941. Whether you actually pay all $941 depends on the repayment cap on Line 28 for your tax year.
Shared Policies and Year of Marriage
Two situations pull you into Parts IV and V. Skipping them when they apply produces wrong numbers on the reconciliation.
Part IV, the shared policy allocation, applies when one Marketplace plan covered at least one person on your return and at least one person filing a different return. Divorced couples who shared a plan for part of the year, a parent covering a child who isn’t a dependent, and unmarried partners on the same policy all land here.5Internal Revenue Service. Instructions for Form 8962 You split the enrollment premiums, SLCSP premiums, and APTC between tax families. If both parties agree, you can use any percentage from 0 to 100, but the same percentage has to apply to all three amounts for a given month. If you can’t agree, the default is each tax family’s enrolled members divided by total enrolled members. Divorced or legally separated couples who don’t agree default to 50/50 instead of the proportional formula.
Part V is an optional alternative calculation for the year you got married. Combining two incomes on a joint return often pushes household income higher than either spouse projected alone, which can create a large excess APTC repayment. Part V may reduce that. To qualify: both spouses unmarried on January 1, married by December 31, filing jointly, someone in your tax family had Marketplace coverage before the first full month of marriage, and APTC was paid during the year. If the alternative calculation doesn’t reduce your repayment, you’re not required to use it. Work through the eligibility table in the Form 8962 instructions before pulling out Publication 974 for the worksheets.
What’s Different for Tax Year 2026
Three changes hit at once for 2026, and each raises the cost of underestimating income at enrollment.
The repayment cap is gone. For tax years 2021 through 2025, filers under 400% of the FPL had a limit on how much excess APTC they had to pay back. Section 71305 of Public Law 119-21 eliminates that limitation for tax years beginning after December 31, 2025.8United States Congress. Public Law 119-219Internal Revenue Service. Questions and Answers on the Premium Tax Credit In the $941 example above, that entire amount would be owed with no cap.
The 400% FPL income cliff is back. From 2021 through 2025, filers above 400% of the FPL could still qualify for a partial credit. That enhancement expired. For 2026, if your final household income exceeds 400% of the FPL, you get no Premium Tax Credit at all and repay every dollar of APTC.10Internal Revenue Service. Eligibility for the Premium Tax Credit Using 2025 poverty guidelines, 400% is $62,600 for a single person and $128,600 for a family of four. If your income sits near that line, pre-tax retirement or HSA contributions that reduce MAGI can protect the credit.
The applicable percentages are higher. The lower contribution figures under the enhanced PTC expired at the end of 2025, and 2026 reverts to the original ACA formula. As an illustration, a household at 200% of the FPL that contributed roughly 2% of income in 2025 will be expected to contribute around 6.6% in 2026. The IRS will publish the exact 2026 applicable figure table in that year’s Form 8962 instructions.
What Happens If You Skip Form 8962
If you received APTC and don’t file Form 8962, an e-filed return is rejected under business rule F8962-070 and won’t process until you resubmit with the form attached.11Internal Revenue Service. How to Correct an Electronically Filed Return Rejected for a Missing Form 8962 A paper return will be accepted initially, but the IRS follows up by mail asking for the missing form, and your refund is frozen until you reconcile. Skipping the reconciliation can also complicate the Marketplace’s verification of your eligibility for future advance payments. File Form 8962 every year you had Marketplace coverage with APTC, even if you expect the reconciliation to come out at zero.