Parents put me on their marketplace insurance (1095-A) without telling me now my tax return went from $225 refund to paying $4.6k. What can I do?

[daughteroftheking84]

As the title suggests, I'm filling out my tax return for this year and it was rejected because it said I was missing a 1095-A form. This seemed strange to me as I've been working at my company for 2 years and I'm insured through them so I asked my parents and they said they put me on their plan for 1 month. Now when I included the form, my return went from receiving $225 to owing $4.6k. This is my second time filing taxes so I'm a bit distraught and not sure what to do or if there's anything to do. I would like to mitigate this value if possible. Any feedback is appreciated!

Edit: Thank you for all the helpful comments! Adding for clarification that I am using online H&R Block and have filed and currently filing for single (so not under my parent's). They didn't do it out of malicious intent but we are working to try to figure it out. Unfortunately H&R doesn't allow allocation from what I see as suggested by @abandonedbarns so I'm going to communicate with my parents and their known tax professional to get it resolved. Thanks!

 

[tyrannosaurusradio]

@daughteroftheking84 Hello, tax accountant here. The 1095-A form shows the credits received towards health insurance premiums. If you were only on for a month, I find it hard to believe they gave a credit for $4,800. Is it possible that it is entered in wrong, or that your parents signed you up for more than a month?

 

[action]

@tyrannosaurusradio I really don't understand what happened here. Can you please explain, if you know? Do people who get marketplace credits have to repay them on their taxes? How could that be how it all works?

 

[jake99901]

@action Yes, if you didn't need those credits or were awarded too high an amount you pay it back.

 

[action]

@jake99901 Oh, I get it. He had income & his parents didn't include it in their application. That makes sense, thanks.

 

[rileyrow010]

@action Yeah my gf got screwed by that the year before last. She didn’t input her income correctly when applying for ACA insurance. Was told she owed thousands but a few phone calls and they corrected her insurance payment/ adjusted it higher so she didn’t have to pay that amount all at once. I’m not entirely sure what happened I just know they fixed it and the next year it she ended up getting a fat return from it last year.

 

[frostx1x]

@jake99901 Adding, or if your state uses some God awfully wrong calculation as mine does. For four straight years we owed between $2k-4k when we did our taxes due to the weird way our state calculates their marketplace costs. I did all I could, I went directly to a state health application person and everything. Still, every year it was off by a huge amount, and a penalty for underlayment. I could never get it right, and there was no way to pay more in advance, so always a penalty, and we never really knew what we were paying for that $15k deductible plan! We bailed and I took a lower paying job just for the insurance.

TL;DR Some states are dumb about ACA and slap you with huge tax bills, even when you do everything right.

 

[ritah]

@frostx1x yea so i've been electing to not take the credit and just pay the full premium monthly. then come tax time, i will get whatever real credit that belongs back as a refund.

 

[homeinsalem]

@ritah I’ve tried that. It doesn’t work either. It puts a $0 in the cost of the silver plan and puts me on the hook for the full payment. I’m still fighting with the IRS about that.

 

[flamingoandsparrow]

@action You get a credit based on your predicted income. At the end of the year when they figure out how much money you actually ended up making, they adjust that credit. So if you end up making much more than you put on your marketplace application, you’ll have to pay the difference

 

[peace2016]

@action If you tell the state you make an amount that would qualify for you for credits but then make more you'd no longer qualify for them, ergo pay them back.

 

[jazzytorres]

@action So let's say when you file an application for marketplace insurances, you put down estimated 2021 income as $30k and you get $250/m credit. But at the end of 2021, your actual income was more than $30k. They will require you to return part or all of the credit you received on your tax return. I think you get no credit if your income is over $60k so you will have to return all the credit if your actual income is more than $60k.

There's something really wrong with OP's filing.

 

[lbuenabenta]

@action You actually estimate your income at the beginning of the year to get your ACA credits. Than at the end of the year when you do your taxes, it's all calculated exactly based on what you actually earned. (You can also choose not to use any or all over your credits during the year and received as a refund after you do your taxes.)

I over estimated my pay for 2021, so when I did my taxes, I got an extra $1,600 back in my refund because I didn't take all my allowable credits.

I hope that makes sense.

 

[sgtben]

@action Yes, lets say health insurance is $500 a month. based on last years tax return, the government gives you $250 credit. so you only pay $250 out of pocket. Then when you file taxes depending on if you made more this year or not, your credit for next year is readjusted.

So you owe part of it back depending on how much more money you made this year, and get a refund if you made less. It's really stupid.

 

[semih]

@sgtben Why is it stupid? It’s cool that they advance the tax credit in the first place

 

[melicars]

@semih Here's a reason: I got married and now I'm considered able to pay the credits back. I got married in November. So now we owe $7500 when I was jobless and poor the entire year, until married. So my spouse has to pay for my credits.

There's another way to calculate it though that I'm looking into that should reduce that amount.

 

[aleon1220]

@sgtben why do you call that process "stupid?"

This situation sucks for OP but if you estimated wrong, you should owe the money back.

Why do you think you shouldn't? Wouldn't everyone just estimate a fake number if there were no repercussions?

 

[sgtben]

@aleon1220 Because if you're low enough income to qualify, you really have no idea how much money you're going to make next year. Odds are you won't be at the same job.

 

[stefnee]

@aleon1220 I’m gonna estimate $5 next year and see what happens.

 

[resjudicata]

@stefnee There is a minimum you have to make to even qualify, isn’t there? To get the subsidy?