There is no penalty for incorrectly estimating your income! The health insurance marketplace knows that estimating income is difficult for many folks uncertain about what 2021 will bring. Fortunately they have a process that balances any differences!
When you file your taxes in 2022, the IRS will compare your earnings in 2021 to what you reported on your health application and reconcile any differences. When you go to file:
- If you end up making more than your original estimate, you'll owe the IRS money on your tax return.
- If you end up make less that you estimated, the IRS will actually give you money back on your tax return!
We often advise folks to estimate on the higher end to avoid owing any tax credit back at the end of the year, but it's up to you!
The good news is that you can adjust your income estimation at any point by contacting Stride! Any tax credit you're receiving will adjust for the following month and you'll have fewer issues at tax time.