Your Taxes and
Affordable Care Act
with this year's filing season, taxpayers
must report certain information
related to health care coverage on their 2014 tax
return when they file this April.
In addition, taxpayers must provide
proof of health insurance coverage or that they
have received an exemption.
With that in mind, let's take a look at how the Affordable
Care Act might affect your tax situation, and based on your
type of coverage, which new tax forms you might be receiving.
Tip: For additional
information about IRS tax forms related to health care
insurance, please see the article, Health Care Law:
Changes to IRS Tax Forms.
The biggest change for most taxpayers is found on Line 61 of
Form 1040, where individuals must either check a box to show
they had health insurance or pay a penalty. In general, the
penalty applies to individuals who did not have health
insurance for more than three months in 2014.
In 2014, the penalty is the greater of one percent of
modified adjusted gross income or $95 per adult ($47.50 per
child under age 18, up to a maximum of $285 per family). While
the IRS cannot issue a lien against you in order to make you
pay the penalty, they are allowed to withhold the money from
Certain persons may qualify for an exemption from the penalty
such as those who do not need to file a tax return ($10,150
for individuals, $13,050 for heads of household, and $20,300
for a married couples filing jointly). Other exceptions (there
are eight in total) include being a member of a federally
recognized tribe or qualifying for a hardship exemption if you
filed for bankruptcy in the last 6 months or had medical
expenses you couldn't pay in the last 24 months that resulted
in substantial debt.
Taxpayers who believe they qualify for an exemption must apply
and receive an exemption certificate from the Marketplace.
There's an additional twist for the approximately eight
million people who purchased health insurance through the
Healthcare Marketplace ("the Exchanges"), many of whom
received subsidies that were paid to insurance companies and
applied directly to their insurance premiums.
What taxpayers might not realize is that in many cases these
subsidies were based on household size and income for 2012.
Remember, the enrollment period began October 1, 2013 before
taxpayers had filed their 2013 tax returns.
If income or household size changed in 2014 and the IRS was
not notified of these updates, taxpayers may be liable for
paying additional subsidy monies or conversely, receive
refunds for amounts overpaid. In other words, if you received
a bonus in 2014 (change in household income), it could mean
that you owe the government money.
through an Employer, Private Insurance, Medicaid or Medicare
New Tax Forms: 1095-B, 1095-C
1095-B. If your healthcare coverage is provided by
private insurers or self-funded plans, you should receive Form
1095-B; however, because tax year 2014 is a transition year,
these forms are not required when filing your 2014 tax return.
1095-C. If your healthcare coverage is provided by your
employer, you should receive Form 1095-C; however, because tax
year 2014 is a transition year, these forms are not required
when filing your 2014 tax return.
Enrollment through the Healthcare Marketplace
New Tax Forms: 1095-A, Form 8962
Form 1095-A. If you purchased health insurance from the
Marketplace you will receive Form 1095-A showing details of
your coverage such as the effective date, amount of your
premium payment, and any advanced premium credit you received.
Form 8962. The amount of any advanced premium credit
you received in 2014 is reported on Form 8962. This form is
also used to figure out the actual premium credit as well.
If you DO qualify for an exemption: Taxpayers must
apply for the exemption from the Marketplace and if approved,
will receive an exemption certificate number, which must be
reported on Form 8965.
If you DO NOT qualify for an exemption: Taxpayers that
do not qualify for an exemption and are uninsured are required
to pay a penalty (see above) when filing their tax return.
Form 8965 is used to calculate the penalty.
Don't hesitate to call or email with any questions about the
ACA and your taxes.
Financial Services at Sullivan & Company, CPAs
Sullivan leads our Financial Services Division and is here to
help you navigate your financial future. As an Investment
Advisor Representative, he is able to provide an
independent opinion on the investments you already own or
are considering buying.
We can structure a portfolio
based on your risk tolerance or we can help you decide how
to invest in your company 401(k) plan. We work with each
client to identify their concerns and to provide solutions
according to their situation.
is also experienced in company retirement plans. If you own
a business that does not have a plan; we can discuss your
options and set up a plan that fits your company.
If your business already has a
plan; we offer a free evaluation of the plan to ensure that
it is up to date and working well for you and your
Our goal is to provide personal, unbiased and independent
advice to help you make well-informed decisions about your
financial life and investments.
Contact Paul Sullivan or Jordana Para to set up a free initial
consultation (301) 657-8080.
And as always if you have any questions about accounting or
investments and how they effect you or your business, please give
us a call. We
can help guide you in the right direction.
Remember you can call our offices if you have any
questions about these or any other accounting, tax,
financial planning or insurance related issues, at
Regards, Paul Sullivan, CPA
President, Sullivan & Company