What to do if client receives a Premium Tax Credit letter

Some taxpayers may receive a letter from the IRS requesting information on advance payments of the Premium Tax Credit. Letter 0012C requires you or the taxpayer to take several steps, and it could mean the client is due a refund. Here is what you should know and what you should do with the letter.

  1. Why is my client receiving letter 0012C?

The Health Insurance Marketplace made advance payments of the premium tax credit to the individual’s or family’s health insurance company to reduce premium costs in 2015. The taxpayer didn’t include Form 8962, Premium Tax Credit, when they filed an individual 2015 tax return. The form is needed to reconcile the advance payments.

  1. What if my client doesn’t reconcile payments?

The taxpayer won’t be eligible for advance payments of the premium tax credit or cost-sharing reductions to help pay for Marketplace coverage for the following year.

  1. What should I do?

You must respond to the letter and should do so quickly. Provide information requested in the letter including a copy of Form 1095A, a completed Form 8962 and a copy of the corrected second page from the original return that shows the “Tax and Credits” and “Payments” sections. Complete either the line for “excess advance premium tax credit repayment” (line 46, Form 1040, or line 29, Form 1040A) or the line for “net premium tax credit” (line 69, Form 1040, or line 45, Form 1040A).

  1. What if the taxpayer filed a Form 1040EZ?

Transfer the information from Form 1040EZ to Form 1040A and include it with your response.

  1. What if the taxpayer disagrees with the letter?

Send the IRS a letter explaining what information you think is in error. If you didn’t purchase a health insurance policy from the Marketplace, you must notify the IRS.

  1. Do I need to file an amended return?

No. Do not file a Form 1040X, Amended U.S. Individual Income Tax Return. We will use the information you submit to process the original return.

  1. How do I know if a refund is due?

The IRS will send the refund about 6 to 8 weeks after receiving all of the necessary information if one is due after reconciling the advance payments.

  1. How do I respond?

Letter 0012C provides a fax number or you can send the response and information to the address listed at the beginning of the letter. Include a copy of the letter with your response.

  1. What if I have more questions?

Call (866) 682-7451 ext. 568 or visit www.irs.gov/aca.