UPDATED 8/27: The IRS is issuing letter 5591, 5591A, and 5596 to those who received an advanced premium tax credit to help pay for 2014 health insurance but haven’t yet filed 2014 tax returns. The IRS is urging taxpayers to file their taxes along with Form 8962 within 30 days of receiving this letter in order to maintain eligibility for future premium assistance and avoid a gap in receiving help to pay for Marketplace insurance.
If you haven’t filed your 2014 taxes and received an advanced premium tax credit to help you pay for your 2014 health insurance, the IRS urges you to file your 2014 taxes as soon as possible, in order to receive a timely advanced premium tax credit from your Marketplace for the next open enrollment period (2016 health insurance). When you use TurboTax it’s easy to accurately report your health insurance coverage and your advanced premium tax credit.
If I Filed a Tax Extension Why Do I have to File Before the October 15 Extended Deadline?
The Marketplace will determine your eligibility for advance premium tax credits and cost-sharing reductions for 2016 health insurance coverage this fall. Filing your 2014 tax return as soon as possible to reconcile 2014 advance premium tax credits and maintain your eligibility for future premium assistance will help you avoid a gap in receiving help to pay for your Marketplace insurance.
If advance premium tax payments were applied to your health insurance premiums for you or a member of your family, you will not be eligible for advanced premium tax credits or cost-sharing reductions to help you pay for your 2016 health insurance unless you file your 2014 taxes.
Under the Affordable Care Act, when you purchase your health insurance from the Health Insurance Marketplace and receive an advanced premium tax credit, your advanced premium tax credit is reported and compared to the actual premium tax credit you are eligible for. Depending on your actual income and family size, you may receive a bigger tax credit or may have to pay some back when you file your taxes, just like when your actual withholding is compared to your tax liability.
How Do I Report My Advanced Premium Tax Credit?
You should have received a 2014 form 1095-A from the Health Insurance Marketplace (Healthcare.gov or your state exchange). The form will indicate information like date of coverage, amount of insurance premium, and your advanced premium tax credit applied to your insurance. In TurboTax, entering the information from the form is as easy as entering W-2 information. TurboTax will do all of the calculations for you and figure out if you should get a bigger premium tax credit or received too much based on your income.
Are There Tips if I Filed an Extension and Received an Advanced Premium Tax Credit?
First, don’t be afraid to jump in and file your 2014 taxes as soon as possible, if you want to qualify for an advanced premium tax credit to help you pay for 2016 health insurance. You may end up receiving a tax refund once TurboTax searches for all the tax deductions and credits you’re eligible for. Plus, it is easy to e-file your taxes online and report your health insurance status with TurboTax. E-file is the fastest, most accurate way to file your taxes and TurboTax does not charge for Affordable Care Act tax forms.
Also, don’t forget about any IRA contributions or other deductions that may lower your adjusted gross income, increasing the possibility of a bigger premium tax credit.
Your circumstances may have changed since you purchased health insurance and you may now be eligible for an exemption from the tax penalty for not having 2014 health coverage. Exemptions can range from income being below the IRS tax-filing threshold to hardship exemptions like losing your home to foreclosure. You can check out the IRS free online tool to find out if you’re eligible for one of the exemptions.
As with all the tax laws, TurboTax is always up to date and has you covered. If you have more questions about the Affordable Care Act and how it impacts you, you can get your questions answered at TurboTax Health.