Question: I heard that individuals will receive a 1099 from the Federal govt for any tax credits and/or subsidies they receive and will have to report it as income for state and federal tax purposes. Can you confirm?
Answer: No. The advanced premium tax credits (“APTC”) and cost sharing reductions (“CSR”) are not types of income and therefore are not likely to be reported on a form 1099. However, it is likely that qualifying individuals will receive a statement at tax time reporting any subsidy received. This statement will be used to help reconcile the APTC received (based on estimated income) with the APTC that should be received (based on actual income) at tax filing time. The APTC/CSR are not considered income and are not taxable regardless of how they get reported.
Thank you Steven C Stasoiski, Health Insurance and Tax Professional from Seal Beach, CA for this answer.