“Extension on the Go” podcast by Debbie Johnson. Episode 159: ACA and Taxes
COLUMBIA, Mo. – The 2015 tax year will include new tax forms related to the Affordable Care Act.
For the 2014 tax return, taxpayers simply had to declare that they had health insurance.
“The Internal Revenue Service took your word for it that you had health insurance,” said Andrew Zumwalt, assistant professor for financial planning for University of Missouri Extension. “For 2015 taxes, the IRS will get that proof in the form of 1095A, B or C.”
Form 1095A is issued for health insurance coverage purchased from the ACA marketplace that came with an advance premium tax credit. The information will help reconcile estimated versus actual income.
“If you underestimated your income—you made a little bit more during the year than what you told the government—then you may have to repay some of your premium tax credit,” Zumwalt said. “If you overestimated your income, then your refund will actually go up a little bit.”
The information from the 1095A form must be transferred to Form 8962. Then Form 8962 must be filed with your tax return, Zumwalt says. If you don’t file that form, then you may be disqualified from receiving assistance the following year, or even accessing the marketplace, he said.
Form 1095B is proof of insurance from a broker, insurance company or a small employer. Form 1095C is proof from a large employer with more than 200 employees. Technically, you don’t have to have 1095B or C to file your taxes.
“If you had insurance all year, which most people do through their employer, then you simply mark on your tax return that you had full coverage and you move on,” Zumwalt said. “The IRS will receive these forms and double-check that you and everyone listed on your tax return actually had insurance for the entire year.”
Form 1095A should already be out, but Form 1095C has been delayed, Zumwalt said. The IRS gave large employers an extension, so they have until March 31 to provide these forms for their employees.
There is one situation where you might need Form 1095C with your tax return.
“If you had an offer of coverage but declined it, then you might need that form to show that your coverage was actually considered unaffordable,” Zumwalt said.
If your income is below the filing threshold, which is $10,300 for an individual and $20,600 for a married couple filing jointly, then you are not required to have health insurance.
If your income is above the filing threshold, there is another possible exemption if you lived in a state that did not expand Medicaid.
“Missouri is a state that did not expand Medicaid, and so if your income is below 138 percent of poverty for the number of people in your household, then you also don’t have to provide proof of health insurance,” Zumwalt said. “For an individual, 138 percent of poverty is $16,105, with an additional $5,602 for each person in your household.”
One difficulty associated with ACA marketplace insurance and the premium tax credit is estimating total income. Some taxpayers miscalculated their gross taxable income, which can include more than just your paycheck.
“It can include your wages, unemployment, interest or dividends, retirement payments that aren’t from a Roth IRA or a Roth 401(k) or 403(b),” Zumwalt said. “So, it’s basically any income you received, whether it’s earned or unearned.”
There are sure to be questions this year as you file your 2015 taxes, but there’s help available.
“The Volunteer Income Tax Assistance services can help. Go to IRS.gov and search for the nearest VITA site,” Zumwalt said. “You can get answers or actually have your tax return prepared.”
More information is available from MU Extension’s Health Insurance Education Initiative at extension.missouri.edu/insure.