CA marketplace-how does IRS forgiveness of Excess PTC affect CA overpymt PAS
View More DetailsI have a client that would have to repay 100% of their IRS Advance Premium Tax Credits. But due to the recent law, IRS giving folks a pass on that this year, they do not have to repay the IRS $14,000. When I go to the CA form 3895 and put those numbers on the 3849 it comes out that they get a REFUND of $10,000. I understand that if they had actually paid the IRS the $14,000, the $10,000 refund would makes sense but this does not make sense to me. Basically they paid a small premium and CA is giving them $10,000.
Does CA have any guidance on how to handle this situation. ---IRS forgives the overpayment and CA doesn't take that into consideration when calculating the amounts?
Comments
"IRS forgives the overpayment and CA doesn’t take that into consideration when calculating the amounts?"
That is correct. Similar to how recipients of EIPs in excess of their actual RRC get to keep the money. Similar to how PPP loan recipients get to take a tax deduction for spending the free money given to them by the government.