The PTC is part of Affordable Care Act which pays part of the health insurance premium for qualified taxpayers. They sign up through one of the Health Insurance Marketplaces (HIM) and are given a credit against their premium based on their income. When they file their 2014 tax return, they use the Form 1095-A (Health Insurance Marketplace Statement) they received to reconcile the advance credit to which they actually were entitled.
The IRS has begun sending out letters to taxpayers who claimed the PTC on their returns asking for more information or a copy of their 1095-A. According to the IRS website (near the bottom):
In some situations, before we can send your refund, the IRS may send you a letter asking you to clarify or verify information that you entered on your income tax return. The letter may ask for a copy of your Form 1095-A.
- A Form 1095-A was not submitted or it was incomplete.
- A Form 8962 (Premium Tax Credit) was not completed and included with the return.
- The taxpayer is not eligible for the credit claimed.
- The premium is incorrect. It appears to be the annual not monthly amount.
- Income and other info on the Form 8962 don’t match the rest of the return.
- A Form 1095-A is needed to verify coverage or to answer questions.
If you get a letter, don’t panic but do send in the information the IRS is requesting.