Chalaundra Sneed v. Comm., TCS 2023-11
This post is part of our series on recent important tax cases that may be of interest to accounting, tax, and finance professionals. For more like this, see our Federal Tax Update and California Federal Tax Update, which offer a comprehensive analysis of the year’s most pivotal tax developments.
Advance Premium Tax Credits Require Taxpayer Attach Form 8962 to Tax Return (Chalaundra Sneed v. Comm., TCS 2023-11)
Chalaundra Sneed enrolled in health insurance for herself and her two dependents through the Oklahoma insurance Marketplace. She received Advance Premium Tax Credits (APTC) on the basis of the information she provided in her application. Ms. Sneed did not attach a copy of Form 8962, Premium Tax Credit (PTC), to her income tax return, but later mailed it separately. The notice of deficiency determined that Ms. Sneed was ineligible for the PTC because her MAGI for year at issue exceeded 400% of the federal poverty line amount for her family size. The Affordable Care Act allows a refundable tax credit (the PTC) for eligible taxpayers with household income that is at least 100%, but not greater than 400%, of the federal poverty line amount for the taxpayer’s family size for the taxable year at issue. The APTC may cover some or all of the taxpayer’s monthly premiums for a health insurance plan. When preparing her income tax return, a taxpayer who has received the APTC is required to reconcile the APTC payments made during the year with the amount of the PTC for which she is actually eligible.
Tax practitioner note. A change to the PTC in the American Rescue Plan removed the “cliff” from the credit computation through 2025. A taxpayer can have household income above the 400% mark and still receive a partial PTC.