Would you please provide us with some information about the Affordable Care Act (ACA) and how it will impact the preparation of our 2014 Federal Income Tax Returns?
This upcoming year (2015) will be the first year that ALL taxpayers will feel the effects of the Affordable Care Act. That’s because starting with returns that are due on April 15, 2015 (which cover the year 2014 — the IRS and many others refer to this as “Tax Year 2014″ or TY2014) … tax returns are now required to report on health insurance coverage status.
This is whether you enrolled in health insurance (or not), and whether you used an ACA plan through the various state and federal marketplaces — or not. It’s for ALL taxpayers.
You are required to show that you have had insurance starting on January 1, 2014 in order to avoid the penalty — and that you were without insurance for less than 3 months during 2014, if you are to avoid penalties.
Future penalties are scheduled to increase, so although for some taxpayers it may seem like a decent tradeoff to just pay the penalty for this year, it becomes increasingly costly to do so in the future.
Second, premium tax credits will be evaluated and adjusted according to information submitted on your tax returns.
This means that if you are 1) currently receiving a tax credit (provided directly to your health insurance provider as payments towards your premium — and offered only to eligible individuals and families without access to employer-sponsored coverage, and who purchase insurance through a marketplace) and 2) your income or household size has changed since you were granted the credit, then your tax refund or obligation may be affected.
If you received this premium tax credit, you will be receiving forms 1095 in the mail. KEEP THESE FORMS. You will need them for the tax return process.
Sadly, the issuance of these forms is optional for some entities, so it can be a complicated issue to make sure you have all of them. Which leads me to my last point…
Please, for the love of all that is good and holy, do NOT go it alone this year when preparing your tax returns. I understand that this exhortation may fall on deaf ears to you, as there is clearly a measure of “self-interest” in my saying this to you. But please understand, whether you use MY services or someone else’s — I will be much happier to hear that you had an experienced professional by your side than that you relied upon the notoriously unreliable algorithms of tax softwares. All of the different factors that are coming into play on this year’s tax return are creating a perfect storm for the software companies, and, well … let’s just say that this is probably not the year to “give them a shot.”
E. Dennis Bridges, CPA