Anonymous staff members at the Internal Revenue Service (IRS) have come out with what may prove to be three of the most widely read, most influential and most puzzling short stories of the year.
The stories are the vignettes given as examples in Publication 974 — a draft version of instructions that will help newlyweds see if they qualify for a break on Patient Protection and Affordable Care Act (PPACA) advance premium tax credit (APTC) repayment obligations.
See also: What H&R Block says about PPACA
Since Jan. 1, 2014, PPACA has provided a tax credit that many consumers can use to help pay for qualified health plan (QHP) coverage purchased through a PPACA exchange. Consumers could choose whether to get the tax credit after the end of the 2014 calendar year, when they paid their 2014 income taxes, or to get the IRS to pay the money to the QHP issuers while the year was still under way, to help reduce the amount of cash needed to pay the premiums.
Many consumers who got too much APTC money from the IRS as the year was under way will have to pay some or all of the money back, using a complicated set of rules and formulas.
In Form 974, for example, IRS officials say taxpayers who married in 2014 might be able to reduce APTC repayment obligations if they use the method described in the Alternative Calculation for Year of Marriage, but that newlyweds need not actually use the form.
Readers may enjoy starting some series of stories in the middle, but readers have to read PPACA-related tax forms and instructions in the right order for full enjoyment. Staff members begin the current draft of Form 974 by stating that taxpayers qualify to use the alternative method only if those taxpayers give the right answers to questions included in two other documents: IRS Form 8962 — the IRS Premium Tax Credit form — and the Form 8962 instructions.
Staff members do not describe the kinds of people who might be able to give the right answers to Form 8962 and Form 8962 instructions to use the alternative calculation method.
In the vignettes, the staff members do describe three possible alternative calculation newlywed families, to illustrate how newlyweds should calculate family size to get the APTC repayment break.
For more about the vignettes, read on.
1. Ron, Suzy and Max
Ron, Suzy and their son Max have lived together since July 2013. Ron and Suzy got married in August 2014.
Each of them had coverage under a QHP before September.
Max is Ron’s dependent, and he’s also Suzy’s dependent.