When you’ve got Obamacare, there are a few things you need to know to avoid owing more on your taxes at the end of the year. The first thing is this: your premium tax credit is determined using your estimated income for the calendar year for which you want medical insurance. Some people call this premium tax credit their subsidy.
The way you find the right income number to use for this calculation is to look at your IRS Form 1040 from the previous year. That will give you your adjusted gross income. The government will use this figure to determine the premium you will pay for your health insurance. You need to come up with your best guess as to what your income is going to be at the end of the year.
Guessing Next Year’s Income Can Be Difficult
Your next year’s income can sometimes be hard to guess, so just try to get as close as you can. When you enter this number, you’ll get an estimation of your premium for the next year. This is just the estimated premium that you’re going to end up paying. Your actual premium isn’t calculated until you file your taxes at the end of that year.
A Too-Low Estimate Will Cost You Money at Tax Time
If your estimate for next year is low, that could cause this problem of needing to pay more at tax time. If you underestimate your income, your premium tax credit could be different than what you qualified for. This is how you can end up owing back at the end of the year. So you want to make sure you’re accurately estimating as close as you can.
What if Your Income Changes During the Year?
If there are changes throughout the year in your income, you want to make sure you’re making those adjustments on your health insurance application. The way you can do that is just by calling somebody like one of the consultants at MBhealth to help you navigate that change.
We help plenty of people qualify for the best premium tax credit possible. When you’re ready to sign up for Obamacare, call us at (314) 544-5400. We can help you and your whole family get the best health coverage.
