If you are filing taxes in 2014 you should know how the Affordable Care Act will affect your taxes. You may notice your taxes impacted more this year depending on where you received health coverage from or if you had no health insurance at all.
Most tax payers with health coverage receive that coverage from their employers, Medicare, Medicaid or other government provided plan or through private coverage. If you have coverage from one of these sources you will only need to check the box for Full Year Coverage on line 61 of Form 1040.
If you happen to have received coverage through the Health Insurance Marketplace via your state or federal exchange you have a bit more work to do when filing. You should receive Form 1095-A (Health Insurance Marketplace Statement) via postal mail no later than January 31st 2015. With this form you will have all the information needed to complete the premium tax credit reconciliation. You are required to do this if you were giving advanced premium tax credits to offset the costs associated with your monthly health insurance premium.
Once you receive Form 1095-A, you will need to figure of the difference between the amount of your advance premium tax credit and the amount that is actually allocated to you by using Form 8962 (Premium Tax Credit). The amount of your premium tax credit will be affected by a number of factors including your income and family size for the tax year. You subtract the amount from Part III of Form 1095-A, regarding the advance premium tax credit you have received.
You will end up with one of following options:
- You will be entitled to a refundable credit because your actual tax credit is greater than the subsidy that you received. Form 1040, line 69.
- You will owe an additional tax if the amount you receive dis greater than you were allotted. Form 1040, line 46.
If you had no health coverage for the tax year you will have to claim a health coverage exemption on Form 8965 or pay a penalty. The penalty is determined on Form 1040, line61. Some tax payers may have to file Form 8962 and Form 8965 and also pay a penalty depending on if they had health insurance for the tax year.