With tax season officially upon us, taxpayers who purchased insurance through the exchange, received an advance premium tax credit or received a coverage exemption will need to complete new forms mandated under the Affordable Care Act. To ensure your good standing with the IRS and prevent any delays in receiving your tax refund, it’s important to familiarize yourself with the following forms, depending on your unique situation.
If you obtained your health insurance through a federal or state exchange (Marketplace), you will receive Form 1095-A in the mail by January 31, 2015. The information on the form will be used to calculate the Premium Tax Credit (Form 8962), especially important if you received assistance in paying for your health insurance premiums (advance premium tax credit). It’s critical to complete this form in its entirety so your tax services provider can prepare your 2014 income tax return.
This form should be completed if you obtained your insurance through the Marketplace and are eligible for a premium tax credit. In most cases, taxpayers will have received an advanced premium tax credit (subsidy) during the year to help pay their monthly health insurance premiums.
It is important to remember that if you received a subsidy, you must complete Form 8962 so that your tax services provider can reconcile the calculated premium tax credit based on your actual 2014 income and family size with the advance premium tax credit you received during the year. If you neglect to complete this form, not only will your refund be delayed and you can be denied an advance of the premium tax credit in future years.
Form 8965 is intended for taxpayers to report a coverage exemption granted by the Marketplace or claim a coverage exemption on your tax return. In addition, if for any month in 2014 you or another member of your household did not have health care coverage or a coverage exemption, the instructions for Form 8965 outlines the information needed for your tax services provider to calculate your Shared Responsibility Payment – the new “tax” on those who do not have sufficient health insurance coverage.
Some coverage exemptions are available only from the Marketplace; others are available only by claiming them on your income tax return. There are 19 types of Coverage Exemptions listed in the Instructions for Form 8965 including income below filing threshold; short coverage gap; coverage considered unaffordable in relationship to household income; and others.
Have questions about what forms you’re required to complete this tax season? RKL is here to help you navigate the various reporting requirements, provide needed calculations and keep you in compliance. Contact your RKL service provider today or one of our office locations.
Contributed by Chris A. Luppold, CPA, MBA, CGMA, a manager in RKL’s Tax Services Group. Chris has over 35 years experience in public accounting and provides services a wide range of areas including general business consulting, tax preparation, estate planning and tax planning for his clients.