Are You Covered? The IRS Wants to Know?

Healthcare taxesWhile many people are familiar with the reporting requirements for businesses that are a part of the Affordable Care Act (ACA), individual taxpayers will also need to provide the IRS with confirmation that they are maintaining minimum essential health insurance coverage (the individual mandate), or else pay a penalty called the “shared responsibility payment.”

Naturally, the IRS has developed more forms for reporting purposes, as well as adding new lines to old forms.

Most taxpayers will only need to check a box on their tax return to confirm that they had health coverage for all of 2014. But there are also new lines on Forms 1040, 1040A and 1040EZ. Here’s a brief overview of what to expect on your tax forms this year.

On Form 1040:

  • Line 46: Enter advance payments of the premium tax credit that must be repaid.
  • Line 61: Report health coverage and enter individual shared responsibility payment.
  • Line 69: If eligible, claim net premium tax credit, which is the excess of allowed premium tax credit over advance credit payments.

On Form 1040A:

  • Line 29: Enter advance payments of the premium tax credit that must be repaid.
  • Line 38: Report health coverage and enter individual shared responsibility payment.
  • Line 45: If eligible, claim net premium tax credit, which is the excess of allowed premium tax credit over advance credit payments.

On Form 1040EZ:

  • Line 11: Report health coverage and enter individual shared responsibility payment.

Note that Form 1040EZ cannot be used to report advance payments or to claim the premium tax credit.

New forms include:

  • Form 8965, Health Coverage Exemptions – This form is used to report a Marketplace-granted coverage exemption or claim an IRS-granted coverage exemption on the return.
  • Form 8962, Premium Tax Credit – This form is used to reconcile advance payments of the premium tax credit, and to claim this credit on the tax return. Additionally, if individuals purchased coverage through the Health Insurance Marketplace, they should receive Form 1095-A, Health Insurance Marketplace Statement, which will help complete Form 8962.

If you have any questions about reporting requirements under the Affordable Care Act, or on any other tax issue, please contact Gray, Gray & Gray’s Tax Department.

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