Afforable Care Act and 2014 Tax Filings – What to Expect

Affordable Care Act 2014

A very hot topic for both the tax professional and the taxpayer leading into the 2015 year is the Affordable Care Act and how it should be treated on the tax return. To refresh, the Affordable Care Act requires the taxpayer to have one of the following: (1) have minimum essential health coverage, (2) qualify for an exemption, or (3) make an individual shared responsibility payment with the filing of your 2014 tax return.

For the Taxpayer:

Form 1095-A: If you purchased coverage through the Marketplace, the 1095-A will be sent to you showing your coverage. You should receive this by the end of January. You will need to give this to your tax preparer.

Here are a list of additional pages that could be in your 2014 tax return relating to "ACA" (if you purchased health care through the Marketplace):

Form 8962 Premium Tax Credit: This credit helps taxpayers with moderate income afford the health insurance coverage required by the Affordable Care Act. In essence, the  government pays part of the taxpayers health coverage with an advance payment and the taxpayer covers the rest by making monthly premium payments. If applicable, this form will be included in your 2014 tax return and will be where the tax credit is claimed as well as to reconcile those advance payments. If you overpaid, you could get a refund. Whereas, if you underpaid, you may owe additional tax. To reiterate, you would only see this form IF you went through the Marketplace to receive health care coverage.

Form 8965 (will need to be completed for each person in the household). This form is where you would report a coverage exemption granted by the Marketplace or to claim a coverage exemption on the taxpayers tax return. Note: "tax household" would include taxpayer, spouse, dependents, individuals that CAN be claimed as a dependent but that are not (unless they are claimed on another person's return). Household income is taxpayers Modified Adjusted Gross Income and Modified Adjusted Gross Income of dependents (in regards to tax household).

Here are examples of additional questions that your tax preparer may ask:

1. Did you (and your household) have full year coverage?

2. Was the coverage through the Marketplace (the Exchange)?

3. If you have dependents listed on your tax return and they were required to file a tax return, you must list their "Adjusted Gross Income" (AGI).

The new Affordable Care Act health care regulations can be confusing. If you have question, be sure to reach out to your Wilmington, NC CPA or visit healthcare.gov.