Exceeding Income Requirements for the Obamacare Tax Credit
Taxpayers whose income is 100 percent to 400 percent of the poverty level might qualify for the premium tax credit if they buy their health coverage through their state’s Affordable Care Act exchange, Grissinger said.
However, taxpayers run into problems with this credit because it’s figured at the beginning of the year based on the previous year’s income. If your income ends up being higher than the previous year’s income on which the credit is based, you could have to repay some of the credit you received when you file your tax return, Grissinger said. Or if you and your spouse separate and use a married filing separately status, you typically can’t qualify for the credit.
Unfortunately, you likely won’t be aware that you have to pay back some or all of the credit until you complete your tax return, he said. “This new wrinkle has caused a lot of people to have much smaller refunds,” Grissinger said.