If you are one of the many that plan on getting married in 2015 and you have qualified for a tax credit through the Marketplace Exchange, you may be in for a surprise when you file your taxes, if your reported income is lower than what you actually file.
If you had an application through the Marketplace and received a tax credit based on your single income, you take the full amount monthly to reduce your premiums, and you get married during the year, the IRS has a special rule for that situation.
Under the IRS rule, the tax credit for the months when you were single is computed as if your annual household income is half of what it actually is. Therefore, if your joint income reported is $80,000, half of that is $40,000. If you had originally reported $30,000, based on this calculation, you underestimated by $10,000. That means that you would need to pay back part of the monthly tax credit that you received during the months that you were single. Judith Solomon, vice president at the Center on Budget and Policy Priorities stated, “this creates at least some rough justice, in giving people a chance to simulate what they made when they were single.”
If you want step-by-step instructions, you can utilize IRS publication 974 on how to do the alternative calculation, or you can use tax preparation software, or a tax preparer to do it for you.
Keep in mind that you can reduce the amount of the tax credit that you have access to each month to help reduce or avoid this situation if you know that you may be affected. Consult your tax professional on tax questions and your insurance agent for insurance questions.
You can access the original Q&A article by Kaiser Health News (KHN – a nonprofit national health policy news service) at How Getting Married Affects Health Insurance Tax Credits.
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