Friday, September 26, 2014

Health Insurance Credits and the tax effect of those credits

If you purchased health insurance through any of the exchanges, there will be a new form you will get from your insurance exchange.  This form must be included with your other tax forms (i.e. W-2, 1099-Misc, 1099-R, 1098) before you can file your tax return. The form, Form 1095-A, lists everyone in the household who has coverage and what the government paid for each person health credits.
In addition to this form, the standard Form 1040 is going to have a few changes to it, as follows:
  • Line 46: You will need to report the excess of any premium tax credit received throughout the year.
  • Line 62: You will need to report whether your client has the minimum essential coverage or owes a penalty.
  • Line 69: You will need to report the amount of the Premium Tax Credit
Form 8962 is the Premium Tax Credit Form. This form is to be used to claim the premium tax credit or reconcile any PTC amounts received in advance during the year to cover health care premiums.
Finally, Form 8965 is the health coverage exemption form. This form is used to report exemptions from insurance requirements.
Many organizations are predicting a delay to the tax season due to the need for Form 1095-A before filing tax returns.