How do I fill out the Alternative Calculation for Year of Marriage (Form 8962 Part V )?

Advance Premium Tax Credit (APTC) received in excess of what the taxpayer is allowed typically needs to be repaid. If the taxpayer in question got married during the tax year and their new "tax family" includes an individual with marketplace insurance who received APTC, Part V of Form 8962 may be used to reduce the amount of excess APTC to be repaid.

Note: The calculation is not completely automated. The individual preparing the return must figure the amount of the alternate contribution before the program will figure the excess advance premium tax credit that needs to be repaid.

Why would I use the alternative calculation?

Electing the alternative calculation is optional, but may reduce the amount of excess APTC you must repay. This is only available in the year of marriage. 

Am I eligible for the Alternative Calculation for Year of Marriage?

To be eligible to use the alternative calculation, you must answer yes to ALL the following:

• Were you and your spouse each unmarried on January 1?
• Were you married by December 31?
• Are you filing a joint return with your spouse?
• Was anyone in your tax family enrolled in a qualified health plan before your first full month of marriage? (For example, if you got married on July 15, your first full month of marriage was August.)
• More APTC was paid during the tax year than should have been paid according to Worksheet 3, found in Form 8962's instructions.

If you do not meet the above conditions, you are not eligible to elect the alternative calculation. 

Step One: Figuring the entries needed to claim the Alternative Year of Marriage Calculation (Part V)

Before completing Part V within our software, you must calculate the following:

• Alternative family size
• Alternative monthly contribution amount (see Figuring the Alternative Monthly Contribution Amount below)
• Alternative start and stop months

Note: Only make the entries in the program for the spouse that had marketplace insurance. If both spouse's had marketplace insurance, complete the entries for each spouse separately.

The alternative family size is the family unit that existed before the marriage, but only for the individual on the tax return that had coverage. Do not make any entries for the taxpayer or spouse that did not have coverage.

The alternative start month is the first month in which the taxpayer had marketplace insurance while the alternative stop month is the either the last month having marketplace insurance or the month of the marriage, whichever is earliest. For example if a taxpayer and spouse were married in August and the taxpayer had marketplace insurance all year, the alternative start month would be January and the alternative stop month would be August.

To determine the alternative monthly contribution amount, see the instructions below. 

Figuring the Alternative Monthly Contribution Amount

There are 3 items needed to figure the alternative monthly contribution amount: tax family size, federal poverty level and household income.

We will be using the following example to showcase the steps:

• Suzy is single and does not have marketplace insurance. Her income for the current year was $100,000
• Bob has two kids and he was covered by marketplace insurance all year. His income for the current year is $30,000
• Suzy marries Bob in August of the current year.

1. Determine tax family size

Only the individual with marketplace coverage. In our example, Bob has 2 kids. His tax family size is 3.

2. Figure the Federal Poverty Level

Based on the 8962 instructions, the federal poverty level for a tax family size of 3 is $24,860.

3. Determine the Household Income

• The MAGI of the taxpayer and spouse which includes income that is not subject to tax (foreign earned income, tax-exempt interest, portion of Social Security Income that is not taxable.
• Income of everyone in the tax family that is required to file a return due to the tax filing threshold.
• Divide in half
• Example:
  • Suzy's income: $100,000
  • Bob's income : $30,000
  • Total Household income: $130,000
  • 1/2 Household income (AKA Alternative household income): $65,000

Calculation

Now that you have all the amounts needed, let's see the calculation.

1. Alternative household income (step 3 above): $65,000
2. Federal Poverty Level for family size of 3 (Steps 1 and 2 above): $24,860
3. Divide income by poverty level: $65,000/$24,860 = 2.6146 x100 = 261.46%
4. Look up applicable figure in 8962 Instructions

5. Multiply alternative income by Applicable figure to figure alternative contribution amount. Divide by 12 to figure alternative monthly contribution amount. 

$65,000 X .0444 = $2,886

$2,886 / 12 = $240.50

Step Two: Complete Part V within your return

To complete Part V of Form 8962, please follow the steps listed below.

• Navigate to the Health Insurance section
• Answer yes, then continue
• Verify household members and continue
• Select Alternative calculation for year of marriage (8962, Part V) and complete the applicable boxes using the information you determined above.

Program Entry: