Tax Tips and Tidbits
- Steven R. Anderson E.A.,
- Master Tax Advisor, H&R Block, Pawling, NY
This is the first part of a 2 part Tax Tips and Tidbits regarding the Affordable Care Act (ACA). The ACA was the biggest single change to the tax laws in many years, affecting most American Taxpayers in one way or another. This week we will focus on the various reporting documents and tax forms.
Form 1095-A: Health Insurance Marketplace Statement. This is a reporting document and is provided by the Marketplace to you and the IRS. If you have insurance through the marketplace, you should have received this form by January 31st. It is used to report the premium amounts, second lowest cost silver plan premiums, and the amount of advance premium tax credit (APTC) that you received. This information is used to claim and reconcile the premium tax credit received to the amount which you are entitled. If you received any premium tax credit during the year then this form is required before you file your return! This IRS will hold your refund and send a letter if you received an APTC and do not file needed forms.
Form 8962: Premium Tax Credit. This is the form that used to reconcile the APTC you received to the amount of credit you are entitled to. Why do we need to do a reconciliation? Because, when you applied for insurance through the marketplace you estimated your household income. The marketplace calculated your APTC based on that information. Now, at tax time, you need to calculate the actual credit based on your actual household income. If you received too much APTC, you need to pay it back. If you didn’t receive all the APTC you were entitled to, you will get a credit for it on your return.
From 1095-B: Health Coverage. This is a reporting document provided to you and the IRS to report health coverage by self-funded employer plans, government insurance plans, multi-employer and various private insurers. It is new for 2015. It should have been mailed by 2/29, but is not required to be attached to your tax return this year.
From 1095-C: Employer Provided Insurance Offer and Coverage. This is another reporting document used by large employers to report coverage and offer information to employees. This form is new for 2015. . It should have been mailed by 2/29, but is not required to be attached to your tax return this year.
From W-2: Wage and Tax Statement. The value of employer sponsored coverage is reported in Box 12 with the code DD. Such income is generally excludable from tax under Code Section 106, therefore it is not deductible. It’s important to note that this is an informational item, and is not sufficient to serve as proof of coverage.
From 1040: Individual Income Tax Return. If all members of the household had minimum essential coverage for the whole year then the checkbox on line 61 should be checked. If not, then the Shared Responsibility Payment is calculated using a worksheet and the amount is entered on line 61.
Form 8965: Health Coverage Exemptions. This form is used to claim an exemption from the Shared Responsibility Payment, on a month to month basis. There are several types of exemptions and we will talk about these next week.
Again, I want to emphasize that if you received any APTC during the year, you must fill out and attach for 8962 to your return or your refund will be delayed.
Next week we will discuss the Shared Responsibility Payment and it’s exceptions.
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