What this line means
If the advance payments you received (line 25) exceed your actual premium tax credit (line 24), the difference goes here. This is the amount you were overpaid during the year. You received more in advance credits than you actually qualified for based on your final income. This excess flows to Part III, where it may be reduced by the repayment limitation.
Does this apply to you?
- Your income was higher than what you estimated when you enrolled in Marketplace coverage
- You received a raise, bonus, or additional income during the year that you did not report to the Marketplace
- You lost a dependent during the year, reducing your tax family size and your credit
- You got married and combined household income pushed you above your estimated level
Easy to overlook
This is not necessarily the amount you repay Line 27 is the raw excess — the full difference between advance payments and actual credit. But the amount you actually owe back may be less if the repayment limitation on line 28 applies. Filers below 400% of the federal poverty line have their repayment capped. Do not panic at the line 27 number until you check whether the cap on line 28 reduces it. 1 IRS Form 8962 Instructions — Line 27
A mid-year income spike can create a large excess A single event — selling stock at a gain, receiving an inheritance, or cashing out a retirement account — can push your annual household income well above your estimate. The advance payments were based on the lower estimate for the entire year, so the excess can be substantial. Reporting income changes to the Marketplace as they happen reduces the advance payments going forward and shrinks the year-end excess. 2 General filing pattern — income increase triggers excess APTC
Watch out for this
Assuming the excess means you committed fraud. Owing excess advance PTC is common and expected when income changes. The reconciliation process on Form 8962 exists specifically for this situation. The IRS does not treat a repayment as a penalty or a sign of fraud — it is a routine adjustment. File the form, calculate the repayment, and pay what is owed or have it deducted from your refund.
Footnotes
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IRS Form 8962 Instructions, Line 27. https://www.irs.gov/instructions/i8962 ↩
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IRS Publication 974, Premium Tax Credit, Excess Advance Payments. https://www.irs.gov/pub/irs-pdf/p974.pdf ↩