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Friday, January 16 2015

Individual's 2014 Federal Return and the Affordable Care Act.

As we get closer to the beginning of the 2015 filing season, it is important to understand how the Affordable Care Act will impact every individual who files a 2014 federal return. They may be impacted in a small way or major way depending on their health insurance status and where they obtained their health insurance during 2014.

Since the majority of taxpayers will be covered for the entire year by their employer, a government sponsored plan (such as Medicaid or Medicare), or from other qualifying health insurance, they do not need to wait for Form 1095-A in order to file their taxes. Form 1095-A is scheduled to be mailed the first week of February 2015.

Taxpayers who purchased their health insurance at the Marketplace (State or Federal Exchange) will need to do the following:

  • Taxpayer will receive by mail a Form 1095-A (Health Insurance Marketplace Statement) from the Marketplace. This information return should be received by the taxpayer by January 31, 2015 and will include details needed to complete the premium tax credit and do the reconciliation if they received an advance premium tax credit (subsidy) that helped pay their monthly health insurance premiums during 2014.
  • Complete Form 8962 (Premium Tax Credit)
  1. Calculate the premium tax credit based on their 2014 income and family size.
  2. Enter the advance premium tax credit (subsidy) information from Form 1095-A, Part III, if applicable.
  3. Reconcile the antual premium tax credit with the subsidy they received during 2014 which will result in:
    - Refundable Credit - Calculated credit is greater than subsidy received.
    - Additional Tax - Subisdy received is greater than calculated credit.

Taxpayers who did not have health insurance for 2014 will do the following:

  • Complete Form 8965 (Health Coverage Exemptions) to claim an exemption from the health care coverage requirement;
  • Have to pay shared responsibility payment (penalty) which will be calculated according to a worksheet in the Form 8965 instructions.

It should be noted that some individual may have to file both the Form 8962, Form 8965, and may have penalty due, or any combination thereof based on their individual or family member health insurance status during 2014.

To review or learn the new Affordable Care Act (ACA) mentioned above or for more information on the premium tax credit, exemptions, advance premium tax credit and penalty, do not hesitate to contact us.

For those who does not have health insurance and would like to inquire about getting one. Please call us, we have until February 15, 2015 to get enrolled and avoid the penalty.

Posted by: Sync Merchant Services AT 02:40 pm   |  Permalink   |  0 Comments  |  Email

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