Sample Tax Return: Premium Tax Credit and Form 8962 (2025)

A sample tax return with the premium tax credit is one of the best ways to learn Form 8962, because the form only makes sense when you work it from real source documents. This article walks through how the form is built, line by line, using the facts of a practice return: a single taxpayer with a marketplace health plan, a W-2 and a Form 1095-A. It covers the 2025 rules behind each step, but not her answers. Those are yours to work out.

The taxpayer and her documents

Larissa is single, 33, and lives in Tampa, Florida. She works as a dental hygienist for a small employer that offers no health plan, so she buys coverage through the federal marketplace. She has no dependents, so her tax family is just her. During the year the marketplace paid part of her premium straight to the insurer as advance payments of the premium tax credit (APTC).

She brings two documents:

• Form W-2. Her wages and federal withholding. It is her only income.
• Form 1095-A. The marketplace statement. Part III, line 33 gives annual totals in three columns: A is the premium for the plan she enrolled in, B is the premium for the second lowest cost silver plan (SLCSP) that applies to her, and C is the advance credit already paid.

The whole job is to compare what she was paid in advance (column C) with the credit she actually qualifies for once her real income for the year is known. Form 8962 is where that comparison happens.

Form 8962 example: Part I, household income and the poverty line

Line 1: tax family size

Count yourself, your spouse if filing jointly, and every dependent you claim. For Larissa that is one.

Lines 2a, 2b and 3: household income

Household income is modified AGI, not wages and not taxable income. Worksheet 1-1 in the instructions builds line 2a: start with AGI from Form 1040, line 11a, then add back tax-exempt interest (Form 1040, line 2a), excluded foreign income (Form 2555, lines 45 and 50), and social security benefits that were not taxed (line 6a minus line 6b). Line 2b is the modified AGI of dependents who are required to file a return. Line 3 adds the two.

Larissa has none of the add-backs and no dependents, so you still have to finish enough of her Form 1040 to know her AGI before you can start Form 8962.

Line 4: the federal poverty line

For 2025 returns you use the 2024 poverty guidelines, not the 2025 ones. This trips people up every year. Pick the table by state: Alaska and Hawaii have their own, and everyone else, including Florida, uses the table for the other 48 states and DC.

Line 5: income as a percentage of the poverty line

Worksheet 2 divides line 3 by line 4. Do not round. Multiply by 100 and drop everything after the decimal point. A result of 1.8565 becomes 185, not 186. If household income is more than four times the poverty line, enter 401.

Line 7: the applicable figure

Take the line 5 percentage to Table 2 in the instructions and read off a decimal. Under the 2025 table, anything at 150% or below is 0.0000, 200% is 0.0200, 250% is 0.0400, 300% is 0.0600, and 400% or more is 0.0850. The table runs in one point steps, so look up the exact row. Line 6 is reserved, so skip it.

Lines 8a and 8b: her contribution

Line 8a is line 3 times line 7, rounded to the nearest dollar. That is the amount the law expects her to pay toward the benchmark plan for the year. Line 8b divides it by 12 for the monthly calculation.

Part II: the credit and the reconciliation

Lines 9 and 10: which calculation

Line 9 asks whether you must allocate a policy with another taxpayer or want the year of marriage calculation. For a single filer on her own policy, the answer is no.

Line 10 decides annual or monthly. You may use the annual line 11 only if, for every policy, you were enrolled all 12 months and both the enrollment premium and the SLCSP premium were the same every month. Otherwise you work lines 12 through 23 from the 1095-A's monthly lines 21 to 32. Coverage that started in March, or a premium that changed mid-year, forces the monthly method.

Line 11: the six columns

1. Column (a): enrollment premium, from 1095-A line 33, column A.
2. Column (b): the SLCSP benchmark, from line 33, column B.
3. Column (c): her contribution, from line 8a.
4. Column (d): (b) minus (c), the most assistance she can get. Zero if negative.
5. Column (e): the smaller of (a) or (d). The credit never pays more than the premium she was actually charged.
6. Column (f): the advance payments, from line 33, column C.

Notice that the benchmark, not the plan she picked, drives the credit. If she buys a cheaper plan than the benchmark, column (e) can be limited by column (a). If she buys a richer plan, she pays the difference herself.

Lines 24 to 26: the net credit

Line 24 is the total allowed credit, column (e). Line 25 is the total APTC, column (f). If line 24 is larger, the difference is net premium tax credit on line 26, and it goes to Schedule 3 (Form 1040), line 9. It is a refundable credit, so it can increase a refund even when there is little tax.

Part III, lines 27 to 29: repaying excess APTC

If line 25 is larger, she was overpaid. Line 27 is the excess. Line 28 is the repayment limit from Table 5. Line 29 is the smaller of the two, and it goes to Schedule 2 (Form 1040), line 1a as additional tax.

A worked example with different numbers

Here is a made-up taxpayer, not Larissa, so you can see the arithmetic once. Jordan is single, lives in Ohio, and has household income of $37,650. He was enrolled all year with level premiums, so he uses the annual line. His 1095-A shows an enrollment premium of $5,400, an SLCSP premium of $6,000, and APTC of $5,000.

1. Line 5: $37,650 divided by $15,060 is 2.5000, so 250.
2. Line 7: Table 2 at 250 gives 0.0400.
3. Line 8a: $37,650 times 0.0400 is $1,506. Line 8b is $126.
4. Column (d): $6,000 minus $1,506 is $4,494.
5. Column (e): the smaller of $5,400 and $4,494 is $4,494.
6. Line 24 is $4,494 and line 25 is $5,000, so APTC was too high.
7. Line 27: $506 excess. Line 28: $975 (single, between 200% and 300%). Line 29: $506, to Schedule 2, line 1a.

Jordan's income came in higher than the marketplace expected, so he pays some back. Had the excess been $1,400, the cap would have held his repayment to $975. For Larissa, run the same steps with her own documents and see which side of line 26 she lands on.

Common mistakes on a practice tax return with Form 8962

• Using column A as the benchmark. The credit is figured from the SLCSP in column B. Column A only caps it.
• Using wages instead of modified AGI. Add back tax-exempt interest, excluded foreign income and untaxed social security.
• Rounding line 5. Truncate. A one point difference changes the applicable figure and can move a taxpayer into a different repayment band.
• Using the current year's poverty line. The 2025 return uses the 2024 guidelines.
• Taking the annual shortcut when it does not apply. Partial-year coverage or a premium change means the monthly calculation.
• Adding SLCSP amounts from two 1095-As in the same state. The instructions say to take column B from only one form in that case.
• Skipping Form 8962 because the numbers match. If any APTC was paid, the form is required, even when the net result is zero.
• Treating a column B of zero as the real benchmark. Pub 974 notes it can be blank, zero or wrong. When it is, find the correct SLCSP premium before you finish.
• Married filing separately. Generally no credit, with limited exceptions for taxpayers living apart and for victims of domestic abuse or spousal abandonment.

Why practice this on a full sample tax return

Form 8962 sits in the middle of the return. You need AGI before you can start it, and its result feeds Schedule 2 or Schedule 3, which changes the refund or balance due. Preparing the whole return, then checking your Form 8962 and bottom line against a finished return, shows whether you read the documents correctly.

Prepare this practice return

Sources

• Instructions for Form 8962 (2025)
• Form 8962 (2025), Premium Tax Credit
• Publication 974 (2025), Premium Tax Credit
• IRS: Eligibility for the premium tax credit
• IRS: Repayment caps eliminated for excess advance payments of the premium tax credit