Premium Tax Credit packs a punch

What did you do to deserve a punch in the tax?

If you were not required to file a tax return in 2014, you didn’t file a tax return. What could have happened in 2015 to change that? Maybe you purchased health care coverage through the federally-facilitated Marketplace or a state-based Marketplace in 2015 and received the premium tax credit, or PTC. The IRS Says, but if you want a short version, here it is: The PTC is a refundable credit that helps eligible individuals and families with low or moderate income afford health insurance purchased through a Health Insurance Marketplace.

The 1095-A Surprise Punch!

If you or any member of your household received the Premium Tax Credit, you must file a federal income tax return for 2015, even if you are otherwise not required to file. This is a “must file.” Failing to file tax returns will prevent advance payments in the next year. Further, the penalty for failing to file can be up to 10 times more than the penalty for late filings.

The IRS also reminds taxpayers who received advance payments of the PTC that they “should file” their tax returns timely to ensure they can receive advance payments next year from their Marketplace. Filing early will also increase your chances of avoiding a gap in receiving this help since the Marketplaces determine eligibility for advance tax credit payments and cost-sharing reductions for the coverage year in the fall before the new coverage year starts.

Premium Tax Credit: What else?

You will receive a Form 1095-A which provides information to help file your federal income tax return. You will also use your Form 1095-A to reconcile advance payments of the premium made on your behalf with the PTC you are claiming on your tax return. For this purpose, you will use Form 8962 which is filed with your tax return.

You should review your Form 1095-A carefully for incorrect information. If you believe there is an error, contact the Marketplace from which you received coverage. The Marketplace may need to seed you a corrected Form 1095-A.

If the CORRECTED box on the top of your Form 1095-A is checked, this means a change has been made to information provided to you. Be sure you use the corrected form when you fill out your Form 8962 and when you file your tax return.

What else?

These forms may arrive late and you may receive multiple, identical forms from various sources. Keep them all. Look for errors and see if there is a check in any of the CORRECTED boxes. If you moved, there were changes in your coverage or you experienced major life changes, be aware that these circumstances may effect the amount of premium tax credit that you can claim.

You don’t have to do this alone.

Tax services built around you. This is what we do. Call our Fort Smith offices 479-478-6831 or send me an email Melanie@radcliffcpa.com