This is the first year that taxpayers will need to report their health care status on their tax returns. For most taxpayers, this will require checking a box. However, if you are one of the millions of people who bought health care through a marketplace, expect some changes. Additionally, people who were uninsured will be required to pay a penalty unless they receive an exemption. Here are answers to some of the questions you may have as you navigate through changes this year.
#1 – CHECK THE BOX?
#2 – PREMIUM TAX CREDIT
– The Marketplace would have estimated the credit based upon information regarding anticipated household income and family size for the year.
– Taxpayers will need to file IRS Form 8962, Premium Tax Credit, to reconcile advance payments with their actual credit.
– The reconciliation could result in a required repayment, which is subject to certain limitations.
#3 – INDIVIDUAL SHARED RESPONSIBILITY PROVISION
– Enrolled in qualifying health care coverage for each month of the year
– Qualified for a health coverage exemption.
– Required to make an Individual Shared Responsibility Payment when filing their federal tax return.
#4 – EXEMPTIONS
– If you are granted a coverage exemption from the Marketplace, they will send you a notice with your unique Exemption Certificate Number or ECN.
– You will enter your ECN in Part I, Marketplace-Granted Coverage Exemptions for Individuals, of Form 8965, Health Coverage Exemptions, in column C.
– If the Marketplace hasn’t processed your exemption application before you file your tax return, complete Part I of Form 8965 and enter “pending” in Column C for each person listed. If you claim the exemption on your return, you do not need an ECN from the Marketplace.
– For a coverage exemption that you qualify to claim on your tax return, file Form 8965 with your tax return. There is no need to call the IRS or obtain the exemption in advance.
– You will use Part II, Coverage Exemptions for Your Household Claimed on Your Return, of Form 8965 to claim a coverage exemption if your income is below your filing threshold and you choose to file to file a tax return.
– Other coverage exemptions may be claimed on your tax return using Part III, Coverage Exemptions for Individuals Claimed on Your Return, of Form 8965. Use a separate line for each individual and exemption type claimed on the return.
– A summary of possible reasons for exemptions may be found at http://www.irs.gov/Affordable-Care-Act/Individuals-and-Families/ACA-Individual-Shared-Responsibility-Provision-Exemptions– If you or any of your dependents are exempt from the requirement to have health coverage, you will file Form 8965 with your tax return.
#5 – FEBRUARY 15 DEADLILNE
Chris oversees Hungerford Nichols’ Broadcast Services practice in addition to providing accounting and consulting services to a wide variety of clients. He has been serving the tax and accounting needs of closely-held businesses and individuals since 1998. Chris regularly teaches as an adjunct accounting instructor for Grand Valley State University. A frequent speaker, he has also taught a variety of continuing education courses for several state CPA societies.