ACA change clarification?

[Murf2]

I’m sorry to ask, as I’m sure it’s right in front of me, but

For the 2021 tax year will the “clawback “ for earning more than estimated be like it was prior to the 2020 tax year?

I apply the credit monthly then square up at the end of the year.

Thanks
Murf

 

[Sojourner]

It appears to be only for tax year 2020. Quote below from kitces.com:

In addition to increasing the Premium Assistance Tax Credit amount for many taxpayers in 2021 and 2022, the American Rescue Plan Act also provides relief for taxpayers who received advance 2020 Premium Assistance Tax Credits payments in excess of what the actual 2020 Premium Assistance Tax Credit amount should have been.

In general, such overpayments are clawed back by increasing a taxpayer’s income tax liability by the excess payment, subject to certain statutory limits. Section 9662 of the American Rescue Plan Act temporarily pauses this clawback feature for 2020 overpayments only.

 

[bobandsherry]

I’m sorry to ask, as I’m sure it’s right in front of me, but

For the 2021 tax year will the “clawback “ for earning more than estimated be like it was prior to the 2020 tax year?

I apply the credit monthly then square up at the end of the year.

Thanks
Murf

They have done away with the cliff for next two years, now you pay up to 8%. So where cliff may have been thousands for 1 dollar over, it's now 8 cents.

 

[24601NoMore]

They have done away with the cliff for next two years, now you pay up to 8%. So where cliff may have been thousands for 1 dollar over, it's now 8 cents.

I believe the actual number is 8.5%. Not a huge difference, but..

 

[bobandsherry]

I believe the actual number is 8.5%. Not a huge difference, but..

Yeah, thanks, certainly beats dealing with the cliff. Lots of work to do over next 2 years to do so I can then manage whatever the subsidy change is come 2023 for the 3 years until Medicare. Part of me is thinking a phase-out like the next 2 years may be more the norm going forward as government is obviously aware how that's being managed. Phase out will keep more money in the economy and probably help with more taxes actually collected. Next 2 years planning will also help me manage so RMD come 72 is avoided or largely avoided.

 

[Murf2]

Thanks everyone!

Murf