How a 1099 worker picks the income figure for the marketplace when the year is not known yet: net not gross, three estimating methods, the asymmetry of getting it wrong, and when to update.
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The marketplace asks one question a 1099 worker cannot answer exactly: what will the household make this year? The estimate drives the monthly credit, and since the 2026 tax year the penalty for guessing low has no ceiling.
Premiums are set county by county and the credit is set by income, so no table can give a 1099 worker a final number. Enter your ZIP and a licensed agent prices every plan filed where you live against what you actually expect to earn.
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Net, for the household, for the calendar year: Schedule C profit after expenses, less half of self-employment tax and the health insurance deduction, plus a spouse’s wages and any investment income. Last year’s return, line by line, is the template.
Whichever method, round toward the higher figure if two are close.
Estimate too high and the marketplace advances too little credit; the difference comes back as a refund on Form 8962. Estimate too low and the advance was too large; it is repaid with the return, and from the 2026 tax year there is no repayment cap at any income. An estimate that lands just under $63,840 when the year ends just over it repays every dollar of credit received. Err high.
Report a change when the year’s estimate moves by a few thousand dollars or when a household change happens (marriage, a child, a spouse’s job). The advance adjusts for the months left. Updating in July costs less than reconciling in April.
Near $63,840 (one person), $86,560 (couple) or $132,000 (four), the decision is whether a deductible retirement contribution before the filing deadline puts the year under the line. It often does, and the credit restored can exceed the contribution’s cost in tax. A tax professional runs that; the marketplace estimate should assume the plan you actually intend to follow.