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Repayment of Advance Premiun Tax Credits

Level 1

 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?


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3 Replies 3
Level 15

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...

Former Chump..umm... AllStar.
"the game of life is hard to play"

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Level 15
Level 15

My biggest payback so far is $7800...he knew it was coming though and had money saved for it from the lump sum distribution.

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Level 8

Had a client get a lump sum disability payment he was working on for a few years that caused the same thing last year.  I could not find an exception.