Premium Tax Credit 101


MoneyTips

The Premium Tax Credit (PTC) may sound like it is a credit only available to top-tier incomes, but it is actually quite the opposite. “Premium” in this case refers to health care premiums, and the PTC is a way to help those with relatively low incomes to afford health insurance premiums and avoid the potential penalties (and health hazards) of having no health insurance at all. The Tax Cuts and Jobs Act did remove the penalty for not having insurance (aka the individual mandate), but that did not take effect until the end of 2018; you will still be charged a penalty for failure to provide proof of health insurance for the last tax year.

Eligibility for the Premium Tax Credit

If you purchased your health insurance through the federal Health Insurance Marketplace or anyone else included on your federal tax return did so, then you may qualify for the PTC. “Credits are, in general, more valuable than deductions, because they reduce your taxes dollar for dollar,” sa…

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