Premium Tax Credit 8962 - How Does Dependent Income Affect My Claim?

Wait, so even if my kid has to file his own tax return, I still have to add his income to mine for the PTC calculation? Is that true even if they're in college and just working part time? My son made about $7,000 last year at his campus job.

Yes, that's correct. Even if your son files his own tax return, if you're claiming him as a dependent on your tax return, his income must be included in your household MAGI for Premium Tax Credit purposes. The dependent filing requirements and PTC household income rules are separate things. Your son's $7,000 campus job income would need to be included in your household calculation on Form 8962, assuming you're claiming him as a dependent. This applies regardless of whether they're in college or working part-time - what matters is their dependent status on your return.

Did it help you figure out the actual Form 8962 calculations too? I'm looking at the form and all these columns are making my head spin. Does this tool actually walk you through filling out the form step by step?

I'm a bit skeptical about these online tax tools. How accurate was it compared to what an actual tax professional would tell you? I'm worried about relying on some algorithm for something as complicated as premium tax credits.

The tool definitely helped with the Form 8962 calculations. It shows you exactly which numbers go where and explains the percentage calculations based on the Federal Poverty Level guidelines. It made those confusing columns much more manageable. As for accuracy, I actually had my return reviewed by my tax preparer after using the tool, and she confirmed everything was correct. She was impressed that I got all the PTC calculations right on my own. The algorithm seems to be using the same IRS rules and guidelines that tax professionals follow, just presented in a more user-friendly way.

How exactly does this service work? Do they just automate the phone waiting or something? I'm confused about how a third party can get me through to the IRS faster.

Sounds sketchy tbh. Why would I trust some random service with my phone number when I could just call the IRS myself? Probably just another way to collect people's info and sell it.

The service basically automates the waiting process. They use a system that navigates the IRS phone menu for you and waits in the queue. Then when an agent is about to pick up, they call you and connect you directly with the IRS. You don't have to spend hours with your phone on speaker waiting. I was skeptical too at first. But they don't ask for any tax information or personal details beyond your phone number to call you back. They aren't selling information - they just charge a fee to save you from the frustration of waiting on hold for hours or getting disconnected. I've used it twice now and both times got through to an actual IRS agent when I had previously failed on my own after multiple attempts.

Do you know if the FPL amounts are the same for Alaska and Hawaii as they are for the other 48 states? I'm temporarily working in Alaska but my permanent residence is in Washington state, and I'm not sure which FPL chart to use for my Form 8962.

Alaska and Hawaii actually have their own higher FPL amounts that are different from the other 48 states and DC. The Form 8962 instructions include separate FPL tables for Alaska and Hawaii residents. For your situation, you should use the FPL chart based on where you had marketplace coverage, not necessarily where your permanent residence is. If you purchased your marketplace insurance through Alaska's exchange while working there, you'd use the Alaska FPL amounts. If you maintained your Washington coverage, you'd use the amounts for the 48 contiguous states and DC.

Yes, you still need to include her income for Form 8962 purposes. What matters is her status as your dependent for the tax year, not when during the year she earned the income. Since you're claiming her as a dependent on your tax return, her entire yearly income of $5,200 should be included in your household MAGI calculation on Form 8962. The timing of when she earned it doesn't affect whether it counts - only the total amount for the tax year matters for PTC calculations. The only exception would be if her income was below the filing threshold, but since dependents with earned income must file if they earn more than $6,300 (for 2025), she's actually below that threshold and wouldn't be required to file. However, her income still counts toward household MAGI for your Form 8962.

This is really helpful, thanks! I'm curious about the Federal Poverty Level guidelines you mentioned - where exactly do I find the correct year's FPL table? I want to make sure I'm not using outdated numbers when I get to that part of Form 8962. Is it in the form instructions or do I need to look it up separately on the IRS website? Also, when you say "reconciliation process" - are you referring to comparing what we already received in advance premium tax credits versus what we actually qualify for based on our final income? I'm worried we might have received too much since our income was higher than we estimated when we signed up for marketplace coverage.

The Federal Poverty Level tables are included right in the Form 8962 instructions each year - you don't need to hunt for them separately! The IRS updates these tables annually and includes them in the form instructions, so just make sure you're using the instructions that match your tax year. And yes, exactly - the reconciliation process is comparing the advance premium tax credits you already received (shown on your 1095-A) against what you actually qualify for based on your final household income. If your actual income was higher than what you estimated when you enrolled, you might need to pay back some of those advance credits. But don't panic! There are repayment caps based on your income level that limit how much you'd have to pay back, even if you received way more than you qualified for. The good news is that including your daughter's $8,400 might not push you into a significantly different income bracket depending on your total household income. The Premium Tax Credit phases out gradually, so it's not like you suddenly lose everything if you go over a certain threshold.

This is exactly what I needed to hear! I'm in a very similar boat - my dependent daughter has both her regular part-time job income AND she received a small scholarship that was partially taxable. I was getting overwhelmed trying to figure out what counts as "income" for the household MAGI calculation on Form 8962. Your point about including ALL income sources is so important. I almost forgot about the $400 in interest she earned from her savings account. It seems like every little bit of taxable income from dependents needs to be included, which can really add up when you have multiple kids with various income sources. Did you find that using tax software helped catch things you might have missed doing it manually? I'm debating between trying to tackle Form 8962 myself or just paying for software to make sure I get all these dependent income calculations right.