The Affordable Care Act remains a source of confusion, frustration and puzzlement for many people, and with tax season in full swing, its impact on many Americans’ tax returns is only one of the ways the ACA is in the news these days. For those who are wondering about how the ACA might affect their tax returns, here’s some useful information from your accountant in Elkhorn, WI.
The biggest change is that, this year, for the first time ever, health care coverage is something you’ll need to report on your tax return. Your options for doing so will be to check a box that says you were covered for the full year or, in the event that you are claiming or have already received premium tax credit payments in advance, fill out a new form indicating as much.
The premium tax credit is available to those who purchased coverage through the Health Insurance Marketplace. This particular tax credit is designed to make it easier for people with moderate income levels to purchase health insurance during the Marketplace’s open enrollment period. Here are some particulars about the premium tax credit:
- It is only available to those who purchased insurance through the Marketplace.
- Credit recipients cannot be eligible for employer-based or government-based coverage.
- It is dependent upon income.
- Married persons who file separate tax returns are ineligible, although certain exceptions are made in cases involving abuse or abandonment.
- Another person cannot claim you as a dependent.
When enrolling for health coverage through the Marketplace, you have the option of receiving the premium tax credit right away via payment to your insurance carrier. This will aid in reducing your monthly premium payments. You also have the option of receiving the full amount of the premium tax credit when you file your tax return.
Regardless of how you opted to take the premium tax credit, you’ll still have to fill out the appropriate paperwork when filing your taxes. You’ll fill out Form 8962 if your insurer took your advance payments or if you’re unsure whether you might qualify for the tax credit. If you enrolled in coverage through the Marketplace, you should receive Form 1095-A, which contains information you’ll need to have on hand when filling out Form 8962.
Needless to say, as is the case with so many tax-related situations, the specifics of your situation will matter a great deal when determining whether you can benefit from the premium tax credit. The paperwork involved can seem overwhelming, and while filing online is probably easier, it still poses unique challenges, and in either case, you’ll benefit a great deal from understanding what’s in front of you prior to April 15.
Tax season is stressful for many people, and for many different reasons. With help available, there’s no need to let questions about the Affordable Care Act and your taxes get you down. Contact an accountant in Elkhorn, WI for answers to all your questions about how the ACA might factor into your taxes.