Can I reduce the repayment of premium tax credit for Healthcare through the marketplace after income increase?

The Form 8962 is actually what you use to calculate your Premium Tax Credit (PTC) reconciliation - it's not optional, but required when you received advance payments of the premium tax credit (APTC). Unfortunately, the repayment is usually unavoidable if your income ended up higher than projected. There is some good news though - the IRS does have repayment limitations based on income. If your final income is less than 400% of the Federal Poverty Level, there are caps on how much you have to repay. For example, if you're single and your income is between 300-400% of FPL, the repayment is capped at $1,350 for tax year 2024. The first step is calculating exactly where your income falls relative to the Federal Poverty Level, which will determine if you qualify for a repayment cap. I'd recommend working through Form 8962 carefully - the instructions walk you through this process step by step.

I went through something similar last year and started using https://taxr.ai to help me understand my tax credits situation. I'm not super tax-savvy and was getting conflicting advice from friends about the premium tax credit repayment. What really helped was uploading my marketplace forms and tax documents to see exactly where I stood with the repayment caps. The system analyzed my 1095-A form and showed me that I was actually just under the 400% FPL threshold, which saved me almost $1000 in repayments! It also helped me understand how to properly report my income changes to the marketplace for future years so I wouldn't get hit with a surprise bill again.

Just wanted to come back and say I tried https://taxr.ai after my skeptical comment and I'm actually really impressed. I uploaded my marketplace documents and it immediately identified that I was right at the edge of a repayment threshold. It suggested some retirement contributions I could still make for 2024 that would bring my MAGI down just enough to qualify for a lower repayment cap. I was able to make a last-minute traditional IRA contribution that reduced my MAGI by about $2,000, which pushed me from the "no cap" category into the highest cap category, saving me nearly $800 in premium tax credit repayment! The analysis explained exactly how the MAGI calculation works with Form 8962 and showed me the before/after scenarios with real numbers.

I had a similar issue but even worse - the IRS kept sending me letters about missing information regarding my marketplace insurance forms, and I couldn't get through to anyone to explain what was happening. After weeks of calling the IRS helpline and getting nowhere, I used https://claimyr.com to get through to an actual human at the IRS. You can see how it works here: https://youtu.be/_kiP6q8DX5c They get you past the usual "try again later" messages and actually keep your place in line. I spoke with an IRS agent who explained that my 1095-A form had incorrect information that needed to be corrected by the marketplace before I could properly complete my Form 8962. Once I had that info, I was able to contact the marketplace, get a corrected form, and properly file my taxes.

I need to eat my words. After my skeptical comment, I decided to try https://claimyr.com as a last resort because I was desperate to resolve my PTC issue before facing penalties. I had tried calling the IRS over 12 times and either got disconnected or told to call back later. The service actually worked! Got me through to an IRS representative in about 45 minutes when I had previously spent hours trying unsuccessfully. The agent explained that I qualified for a hardship exception on part of my premium tax credit repayment because I had experienced a job loss during part of the year. This wasn't mentioned anywhere in the standard form instructions, and I would never have known without speaking to someone directly. My repayment amount got reduced by about 40% based on this exception. Totally worth it after weeks of frustration trying to get through on my own.

One thing that hasn't been mentioned yet is that you might be able to reduce your MAGI through retirement contributions! For 2024, you can still make contributions to a traditional IRA until the tax filing deadline (April 15, 2025) that count for the 2024 tax year. If you're near a threshold for the repayment caps, putting some money into a traditional IRA could lower your MAGI enough to qualify for a lower repayment cap. For example, if you contribute $4,000 to a traditional IRA, that could reduce your MAGI by that same amount, potentially dropping you into a lower repayment bracket.

Your situation is super common for people who start making more money mid-year! For next time, remember that you NEED to report income changes to the marketplace as soon as they happen. They'll adjust your premium tax credit each month based on your new projected annual income. When I got a promotion last year, I immediately updated my marketplace application with my new estimated income. My monthly premiums went up, sure, but I'd much rather pay a bit more each month than face a huge tax bill at the end of the year. Plus, if your income ends up being lower than you projected, you'll get additional credit when you file taxes.