It’s always a good idea to get organized and prepare early to file your income tax return. Certain provisions of the Affordable Care Act, also known as the Health Care Law, will probably affect your federal tax return when you file this year.
You or your tax professional should consider preparing and filing your tax return electronically. Using tax preparation software is the easiest way to file a tax return. There are a variety of electronic filing options, including our very own RDS Financial Services Self Prepare Tax Portal. You may access it via our website at www.rdsfinancialservices.com. This option is not for everyone.
Having said that, no tax preparation software is a substitute for knowledge of the Tax Code, nor is it a substitute for the services of a competent tax professional. The United States tax code is complex and changes regularly. It is extremely difficult for an individual to know all of the specifics of the tax code, and you could make an error, causing you to pay more in taxes. This oversight may end up costing you more than what you saved in preparation fees, particularly if you factor in penalties and interest from the IRS if you file an incorrect return. If your return is audited you cannot avoid penalties by blaming any errors on the software.
Here are five things you should know about the health care law that will help you get ready to file your tax return.
The Affordable Care Act requires that you and each member of your family have qualifying health insurance coverage for each month of the year, qualify for an exemption from the coverage requirement, or make an individual shared responsibility payment when filing your federal income tax return.
Most taxpayers will simply check a box on their tax return to indicate that each member of their family had qualifying health coverage for the whole year. No further action is required. Qualifying health insurance coverage includes coverage under most, but not all, types of health care coverage plans.
For a limited group of taxpayers, that is, for those who qualify for, or received advance payments of the premium tax credit, the health care law could affect the amount of your tax refund or the amount of money you may owe when you file in 2015.
You may be eligible to claim an exemption from the requirement to have coverage. If you qualify for an exemption, you will need to complete the new IRS Form 8965, Health Coverage Exemptions, when you file your tax return. You must apply for some exemptions through the Health Care Insurance Marketplace. However, most of the exemptions are easily obtained from the IRS when you file your tax return. Some of the exemptions are available from either the Marketplace or the IRS.
If you receive an exemption through the Marketplace, you’ll receive an Exemption Certificate Number to include when you file your taxes. If you have applied for an exemption through the Marketplace and are still waiting for a response, you can put “pending” on your tax return where you would normally put your Exemption Certificate Number.
Individual Shared Responsibility Payment
If you do not have qualifying coverage or an exemption for each month of the year, you will need to make an individual shared responsibility payment when you file your return for choosing not to purchase coverage.
Premium Tax Credits
If you bought coverage through the Health Insurance Marketplace, you should receive Form 1095-A, Health Insurance Marketplace Statement from your Marketplace by early February. Save this form because it has important information needed to complete your tax return.
If you are expecting to receive Form 1095-A and you do not receive it by early February, contact the Marketplace where you purchased coverage. Do not contact the IRS because they will not have access to this information.
If you benefited from advance payments of the premium tax credit, you must file a federal income tax return. You will need to reconcile those advance payments with the amount of premium tax credit you’re entitled to based on your actual income. As a result, some people may see a smaller or larger tax refund or tax liability than they were expecting. When you file your return, you will use IRS Form 8962, Premium Tax Credit (PTC), to calculate your premium tax credit and reconcile the credit with any advance payments.
For more information about the Affordable Care Act and your 2014 income tax return, call us today at (828) 513-0523 to schedule your free consultation, or click the following link to be redirected to the health care section of our website at http://www.rdsfinancialservices.com/hendersonville-nc-health-insurance-quotes.html.
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The Health Care Law