Can anyone explain the point of Part I on Form 8962 required to calculate premium tax credit benefit

Derp

So the point of reference I'm coming from is that I had filled out form 8962 completely. After the fact, I realized that I had inadvertently put in the wrong tax family size. This affected most of the calculations that occur in Part I. To my surprise, almost doubling the size of the tax family CHANGED NOTHING in calculating how much credit I would be receiving or repaying. So if the only calculations that matter are lines 24, 25, and 26, which are just copied over from the 1095A, what's the point of all the information in Part I?

Sincerely interested to know if I'm missing something obvious for what seems to be a huge waste of the amount of time I put into trying to learn the form and making sure the information in Part I was precise.

Austyn

Hello Derp,

The answer depends on where your income falls relative to the federal poverty line (FPL).

Part I absolutely matters in most situations. Here's what it's actually doing: it calculates your household income as a percentage of the FPL (line 5), which then determines your "applicable figure" (line 7) -- essentially the percentage of your income you're expected to contribute toward health insurance. That contribution amount (lines 8a/8b) is then subtracted from the SLCSP premium in Part II to determine how much credit you're entitled to. So family size affects the FPL threshold (line 4), which affects your income percentage (line 5), which affects your contribution amount, which affects your credit.

The reason changing your family size may have produced no change in your final result comes down to one of a few scenarios:

1. Your income was above 400% of the FPL regardless of family size. In that case, line 5 would show 401 either way, the applicable figure is fixed at 0.0850, and the math works out the same.

2. Your income was low enough that the applicable figure hit the floor (0.0000 at or below 150% FPL), again producing the same result either way.

3. Your calculated credit exceeded the actual premium you paid, so the credit was capped by the premium itself -- meaning the contribution amount calculation became irrelevant to the final number.

So Part I is the engine that drives the credit calculation for the vast majority of filers. It just happens that in certain income ranges, the outcome is the same across a range of family sizes. You can find the full IRS instructions for Form 8962 at https://www.irs.gov/instructions/i8962