Updated October 28, 2026. Quick answer: The Form 8962 instructions print three short worksheets. Worksheet 1-1 builds your modified AGI for line 2a, Worksheet 1-2 builds your dependents’ modified AGI for line 2b, and Worksheet 2 turns household income into a percentage of the federal poverty line for line 5, with 401 as the ceiling.
Pub 974 worksheet walk-throughs: Pub 974 Worksheets I to IV, Pub 974 Worksheet V and Pub 974 Step 3 and Step 5 Worksheets.
Pub 974 worksheet walk-throughs: Pub 974 Worksheet C, Pub 974 Worksheet D and Pub 974 Worksheet F.
IRS worksheet walk-throughs: Pub 974 Worksheet X, Pub 974 Worksheet Y and Pub 974 Worksheet Z.
IRS worksheet walk-throughs: Pub 974 Worksheet Q.
IRS worksheets for the 2025 return: Pub 974 Worksheet A, reference months, Pub 974 Worksheet B, excess APTC and QSEHRA Affordability Worksheet N.
What the three worksheets do
Form 8962 is the premium tax credit reconciliation. Its lines 2a and 2b ask for modified AGI, and the instructions say “Use the worksheet next to figure your modified AGI using information from your tax return.” Line 5 asks for household income as a percentage of the federal poverty line, and the instructions say “Figure your household income as a percentage of the federal poverty line using Worksheet 2.” The form’s own caption for line 5 is “Household income as a percentage of federal poverty line”.
Worksheet 1-1: your modified AGI (line 2a)
| Line | What the worksheet says |
|---|---|
| 1 | “Enter your AGI* from Form 1040, 1040-SR, or 1040-NR, line 11a” |
| 2 | “Enter any tax-exempt interest from Form 1040, 1040-SR, or 1040-NR, line 2a” |
| 3 | “Enter any amounts from Form 2555, lines 45 and 50” |
| 4 | “Form 1040 or 1040-SR filers: If line 6a is more than line 6b, subtract line 6b from line 6a and enter the result” |
| 5 | “Add lines 1 through 4. Enter here and on Form 8962, line 2a” |
Worksheet 1-2: dependents’ modified AGI (line 2b)
The instructions tell you to use it “for your dependents who are required to file an income tax return” and not for dependents who file only to claim a refund.
| Line | What the worksheet says |
|---|---|
| 1 | “Enter the AGI* for your dependents from Form 1040, 1040-SR, or 1040-NR, line 11a” |
| 2 | “Enter any tax-exempt interest for your dependents from Form 1040, 1040-SR, or 1040-NR, line 2a” |
| 3 | “Enter any amounts for your dependents from Form 2555, lines 45 and 50” |
| 4 | “For each dependent filing Form 1040 or 1040-SR: If line 6a is more than line 6b, subtract line 6b from line 6a and enter the result” |
| 5 | “Add lines 1 through 4. Enter here and on Form 8962, line 2b” |
Worksheet 2: household income as a percentage of poverty (line 5)
| Line | What the worksheet says |
|---|---|
| 1 | “Enter the amount from line 3 of Form 8962” |
| 2 | “Enter the amount from line 4 of Form 8962” |
| 3 | “Multiply the amount on line 2 by 4.0” |
| 4 | “Is the amount on line 1 more than the amount on line 3?” “Yes. The amount on line 1 above is more than 400% of the federal poverty line. Enter 401 here and on line 5 of Form 8962.” |
| 4, No | “No. Divide the amount on line 1 above by the amount on line 2 above. Do not round; instead, multiply this number by 100 (to express it as a percentage) and then drop any numbers after the decimal point.” |
Worked example: Worksheet 1-1
Illustration, not an IRS example. Every input is invented.
| Item | Illustration |
|---|---|
| Line 1: adjusted gross income (an invented input for the computation) | $52,000 |
| Line 2: tax-exempt interest (invented) | $300 |
| Line 3: Form 2555 amounts | $0 |
| Line 4, computed: line 6a $24,000 minus line 6b $9,000 (invented) | $15,000 (computed) |
| Line 5, computed: line 1 + line 2 + line 3 + line 4, to Form 8962 line 2a | $67,300 (computed) |
The $15,000 on line 4 is the part of the Social Security benefits that is not taxed, which modified AGI adds back.
Worked example: Worksheet 2
Illustration, not an IRS example. The poverty line is the Table 1-1 figure for a family of 2 in the 48 contiguous states and the District of Columbia.
| Item | Illustration |
|---|---|
| Line 1: household income from Form 8962 line 3 (invented) | $60,000 |
| Line 2: poverty line for a family of 2 in the 48 states, Table 1-1 | $20,440 |
| Line 3, computed: line 2 x 4.0 | $81,760 (computed) |
| Line 4 test: is line 1 more than line 3? | No, so divide |
| Ratio at line 4, computed: line 1 / line 2 | 2.935 |
| Line 4 after multiplying by 100 and dropping decimals | 293 |
The ratio is 60,000 divided by 20,440, which is 2.935 to three places. Times 100 that is about 293.5, and the worksheet drops the decimals, so line 4 is 293. A household income of $81,760 or less is at or below 400 percent; anything more is entered as 401.
Where the poverty line comes from
Line 2 of Worksheet 2 is Form 8962 line 4, which comes from Table 1-1, 1-2 or 1-3 in the instructions. They are covered at Form 8962 lines 3 to 6, and the modified AGI lines at lines 2a and 2b.
Edition
This page reads the Instructions for Form 8962 (2025), the file irs.gov served on 2026-10-28 (sha256 in the kit data). It covers the 2025 return, filed in 2026. Check the tax year printed on the worksheet in your own copy and use that year’s line numbers and dollar amounts, because a different year’s worksheet can word its lines differently. The instructions note that for 2025 the 2024 federal poverty lines are used.
Common mistakes
- Rounding the Worksheet 2 percentage. The worksheet says “Do not round”.
- Including a dependent who files only to claim a refund of withheld tax in Worksheet 1-2.
- Skipping line 4 of Worksheet 1-1 when Social Security benefits are partly taxable. It adds back the untaxed part.
Related: Form 8962, Form 8962 lines 2a and 2b, Form 8962 lines 3 to 6, and the ACA subsidy cliff.
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Answer againSources
- Instructions for Form 8962 (2025), Premium Tax Credit: https://www.irs.gov/pub/irs-pdf/i8962.pdf
- Form 8962 (2025), Premium Tax Credit: https://www.irs.gov/pub/irs-pdf/f8962.pdf
Read from the IRS documents linked above on October 28, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.