I have a client that applied for advance premium tax credits for health insurance purchased in the Marketplace. The applicant would have had AGI of less than 400% of the poverty level. However, after submitting the application, the client took a lump sum distribution from a qualified retirement plan to pay outstanding debt. The distribution caused AGI to exceed the 400% threshold. Does anyone know if there are any exceptions to defer or eliminate the obligation to immediately repay the on the 1040?
There aren't any exceptions. Once you go over the 401%, all bets are off.
My biggest so far was a client having to pay back over $ 21,000.
You can possibly lower the income by IRA's, SEP's, HSA contributions...
"the game of life is hard to play"
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