IRS Issues Guidance and Forms for Reporting 2014 Premium Tax Credit

The IRS has released a number of resources for taxpayers preparing to report health insurance on their 2014 tax returns for the first time.  The vast majority of taxpayers will just need to check box (Form 1040, line 61) on their tax returns indicating that they had health coverage in 2014.  However, individuals who had coverage through the Exchange or did not have health coverage in 2014 will have different reporting requirements.

The IRS has issued a final version of Form 1095A (Health Insurance Marketplace Statement), which both state-based and federal Exchanges will send to taxpayers who purchased health insurance through the Exchanges.  This form is an informational statement, required by February 2, 2015, to report individual Exchange coverage to the IRS, and for purposes of claiming a premium tax credit for the taxpayer or family member, and the amount of advanced tax credit payments.

The IRS’s FAQs clarify that taxpayers will use the information on Form 1095A to compute the premium tax credit on their tax return and to reconcile the advance credit payments made on their behalf with the amount of the actual premium tax credit, which will be reported on Form 8962 (Premium Tax Credit).

Taxpayers who did not have minimum essential coverage for 2014 and who are claiming an exemption from the individual mandate must report their coverage exemption on Form 8965 (Health Coverage Exemptions) and attach to their Form 1040. Taxpayers who did not maintain minimum essential coverage each month of their tax year, or who did not quality for an exemption from coverage, will make a shared responsibility payment and report it on Form 1040. The worksheets in the 2014 Form 8965 instructions are to be used to calculate the payment amount due.

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