Tax season 2015 will be unlike any tax preparation period the U.S. has ever seen.
The Affordable Care Act, or Obamacare, is the reason.
The IRS will process north of 150 million tax returns in 2015. Given that this is the first year health insurance, (or lack thereof), or eligible options must be reported on tax forms, chances of confusion are, if not off the chart, very close to its top edge.
Into this mix is the sheer volume of regulations written to fulfill the requirements of the law. On May 5, 2013, the Washington Post Fact Checker, in analyzing various claims made about the number of Obamacare-related regulations, said this: “At the very least, one can point to 10,000 pages of tiny regulatory type regarding the implementation of the Affordable Care Act.”
The IRS, the Dept. of Health & Human Services, the Centers for Medicare and Medicaid Studies (CMS), and other government agencies, all have information about dealing with 2015 taxes. The IRS says that for those who have health care coverage that meets the ACA’s requirements, all that’s necessary is to continue as you are. But any change means you may have to produce documentation on the matter.
If you enrolled through a Health Insurance Marketplace, you’ll need to fill out form 1095-A, the Health Insurance Marketplace Statement. This form asks for such information as individuals covered, when the coverage began or ended, and monthly premiums paid; advance payments on premium tax credits, etc. The information from Form 1095-A is needed to fill out Form 8962 on the Premium Tax Credit, or PTC.
You may be starting to feel overwhelmed and you haven’t even looked at the forms yet. The IRS may well feel your pain. Based on just these two new forms the IRS is going to have to look review and assess possibly hundreds of millions of forms in 2015 that didn’t exist before this tax season.
Here are two wide-ranging information sources you’ll want to examine:
The Minimum Value Calculator
CMS created the Minimum Value Calculator to, as a primer says,
“compute the percentage of the total allowed costs of benefits provided under a group health plan or health insurance coverage, so long as that percentage is no less than 60%."
“MV determines whether an individual, who is eligible for affordable employer-sponsored group health plan coverage, may receive a premium tax credit.”
Keep in mind that if you receive a premium tax credit based on estimated income, and your income increases, you may owe money back to the government.
A CMS webinar on the MVV is found here.
IRS.gov and the Affordable Care Act.
The IRS has a master website, sort of, on the ACA that gives background on the various tax aspects and responsibilities under the ACA. You’ll find it here.
We recommend that you begin with the question-and-answer section, found here. It’s divided into three sections: Individuals and Families; Employers; and Other Entities and Organizations.
When you get through these you’ll have a clearer idea, hopefully, of what you need to do to comply with the law.
Apart from turning over your tax preparation chores to an accounting professional or firm – and even if you do - it’s necessary for you or your tax preparer to know that your tax return is complete and accurate when you sign your name on the form.
At the end of this exercise this thought may well cross your mind: this isn’t like any tax form preparation I’ve done before, ever.
You won’t be alone.Share