Tax Time Now Includes Showing You Have Health Coverage

People are beginning to prepare for tax time. For many that involves sorting through documents, organizing tax mail and detailing monetary transactions into categories. Whether you do your own taxes or are among the 60 percent of Americans who use a professional tax preparer, this year everyone has a new responsibility due to the Affordable Care Act (ACA). You are required to be covered by health insurance or pay a shared responsibility tax.

During this year’s tax filing, citizens are now responsible to demonstrate that they’re covered. On Form 1040 you’ll have to check a box on line 61 indicating that you and any dependents had a health insurance plan for the whole year. While you don’t need to submit documentation, professionals are advising that you maintain proof such as a copy of your insurance card or a copy of your W-2 that reflects health insurance deductions or a form from your federal or state marketplace insurer.

It’s possible to request an exemption from healthcare coverage, if you fill out IRS Form 8965. In some states you will need to have received prior approval from the marketplace. Healthcare.gov/fees-exemptions/apply-for-exemption has all the details. The website also explains some of reasons why you can claim an exemption this year.

The last step you’ll need to resolve is if you received the correct amount of tax credits. Calculations from your 1040 form will determine if you received more in tax credits than you should have or you received too little and should get a refund. Fill out Form 8962 Premium Tax Credit if you received a 2014 health care tax credit or think you should and file it along with your 1040. The IRS, computer tax programs and tax professional are all ready to help you understand and accurately report this new ACA provision.

Source:  Consumer Reports. What Health Care Reform Means for Your Tax Return. February 2015. Vol 80, Issue 2.  p 4.