IRS Tax Forms Changing Under Health Care Reform

The IRS has made some changes to its forms this tax season and introduced some new ones as a result of the Affordable Care Act.

The IRS said Tuesday that along with a few new lines on existing forms, there will also be two new forms that will need to be included with some tax returns. While most taxpayers will simply need to check a box on their tax return to indicate they had health coverage for all of 2014, there are also new lines on Forms 1040, 1040A, and 1040EZ related to the health care law.

To help navigate these changes, the IRS recommended that taxpayers and their tax professionals should consider filing their tax returns electronically. Tax preparation software will help taxpayers file a more complete and accurate tax return as it guides individuals and tax preparers through the process and does all the math. There are a variety of electronic filing options, including free volunteer assistance, IRS Free File for taxpayers who qualify, commercial software, and professional assistance.

Here is information about the new forms and updates to the existing forms:

Form 8965, Health Coverage Exemptions

• Complete this form to report a Marketplace-granted coverage exemption or claim an IRS-granted coverage exemption on the return.

• Use the worksheet in the Form 8965 Instructions to calculate the shared responsibility payment.

Form 8962, Premium Tax Credit

• Complete this form to reconcile advance payments of the premium tax credit, and to claim this credit on the tax return.

Additionally, if individuals purchased coverage through the Health Insurance Marketplace, they should receive Form 1095-A, Health Insurance Marketplace Statement, which will help complete Form 8962.

Form 1040

• Line 46: Enter advance payments of the premium tax credit that must be repaid

• Line 61: Report health coverage and enter individual shared responsibility payment

• Line 69: If eligible, claim net premium tax credit, which is the excess of allowed premium tax credit over advance credit payments

Form 1040A

• Line 29: Enter advance payments of the premium tax credit that must be repaid

• Line 38: Report health coverage and enter individual shared responsibility payment

• Line 45: If eligible, claim net premium tax credit, which is the excess of allowed premium tax credit over advance credit payments

Form 1040EZ

• Line 11: Report health coverage and enter individual shared responsibility payment

• Form 1040EZ cannot be used to report advance payments or to claim the premium tax credit

The Obama administration has also reportedly begun mailing out the Form 1095-A to those taxpayers who received health care coverage and premium tax credits through the health insurance exchanges or marketplaces.

“Certainly the introduction of the Affordable Care Act and the compliance from the last year in 2014 being mandatory will have an impact on many types of filings,” said Greg Rosica, a tax partner at Ernst & Young and contributing author to the EY Tax Guide 2015. “There are really only a few different criteria that people fall under: whether you currently have existing health coverage through your employer and therefore you don’t need to do anything different as a result of it, or you meet one of the exemptions, or you actually went out and purchased [coverage] in the Marketplace because you didn’t have it. There are additional tax filings that need to get done by many people that are using it from the marketplace, both in terms of waiting for a new form to arrive in the mail, the Form 1095-A that people should get by the end of the month of January. Then they also need to report some of this information on a new form for the 1040 to deal with that. All of that adds something new that will take a little bit more time for people to understand.”

Michael Cohn is the Editor-in-Chief of AccountingToday.com.

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