Don’t Lie About Your Income. The IRS Will Find Out.

What Your Subsidy Actually Is

When you enroll in a Marketplace plan, the government estimates your income for the year and pays part of your premium in advance — that’s the Advance Premium Tax Credit (APTC). It lowers your monthly bill right now.

But it’s based on an estimate. At tax time, the IRS compares your estimate to your actual income on Form 8962. That process is called reconciliation — and it’s where people get hurt.

What Happens If the Numbers Don’t Match

You estimated too LOW (said you’d earn less than you did)

You received more advance credit than you qualified for. You pay the difference back — it comes straight out of your tax refund, or you owe the IRS a bill. For lower incomes the repayment is capped, but above 400% of the federal poverty line there is no cap — you repay every extra dollar.

You estimated too HIGH (said you’d earn more than you did)

You received less credit than you deserved. The good news: you generally get the difference back as a larger refund or lower tax bill. Nobody punishes you for this one — but you paid too much all year for no reason.

⚠️ The 2026 Warning: The Cliff Is Back

For 2026, the enhanced subsidies expired — which means the 400% of poverty-line cliff is back. Go even one dollar over that line and you can lose your subsidy eligibility entirely and owe back the advance credit you received, with no repayment cap. A raise, overtime, or a side gig you forgot to report can turn into a surprise tax bill worth thousands.

This is exactly why you don’t guess your income — and why you update it the moment it changes.

What “Lying” Can Really Cost You

An honest mistake gets fixed on your tax return. But intentionally misreporting income is fraud, and the consequences scale up fast:

• Repayment of every dollar of excess credit, plus interest.
• Tax penalties on top of what you owe.
• Loss of Marketplace eligibility — the Marketplace can cut off your advance payments and flag your account.
• Civil and criminal fraud exposure — falsifying a federal application carries fines and, in serious cases, prosecution.

A cheaper monthly premium is never worth a fraud case. Ever.

How to Protect Yourself (and Your Tax Money)

1. Estimate honestly. Use your real expected income — wages, tips, side work, all of it. When in doubt, estimate a little high; you’ll settle up in your favor at tax time.
2. Report changes within 30 days. New job, raise, overtime, lost hours, side gig, marriage, new baby — tell the Marketplace (or tell me and I’ll handle it). Fast updates keep your credit accurate and your tax return boring.
3. Keep your paperwork. Pay stubs, 1099s, and profit-and-loss records if you’re self-employed. If the IRS ever asks, you want answers in a folder, not a panic.
4. Do your annual review with me. Every open enrollment, we go through your income line by line before anything gets submitted. That 20-minute call is the cheapest insurance you’ll ever get — against your own tax return.
5. Never let anyone “fix” your income for you. If an agent or “helper” offers to lower your stated income to get you a bigger subsidy, walk away. That’s their commission — and your fraud case.

Self-Employed? Read This Twice

If you’re 1099, gig work, or own a business, your income moves around — and that’s fine, as long as we update it. I work with self-employed clients constantly: we set a realistic estimate, adjust it quarterly if needed, and keep you off the IRS’s radar. Don’t let irregular income scare you away from coverage.

Where I’m Licensed

I’m a licensed broker in 16 states: Florida, Texas, Arizona, Ohio, Michigan, Iowa, North Carolina, Oklahoma, Missouri, South Carolina, Tennessee, Kansas, Louisiana, Maryland, Mississippi, and Virginia.

This page is educational information, not tax or legal advice. For tax questions about your specific return, talk to a tax professional — and I’m happy to work alongside them.