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Affordable Care Act and the 2014 Federal Return

January 14, 2015


As the beginning of the 2014 filing season is upon us, now is the time to emphasize the importance of the Form 1095-A for taxpayers that received an advance premium tax credit (subsidy) in 2014, as well as remind everyone of how the Affordable Care Act will affect all 2014 federal returns.

Importance of Form 1095-A (Health Insurance Marketplace Statement) for Individuals Who Received an Advance Premium Tax Credit (Subsidy)
For individuals who received an advance premium tax credit (subsidy) that reduced their monthly health insurance premiums, it is necessary to have the Form 1095-A in order to complete the Form 8962 (Premium Tax Credit) because it contains the information that is needed to both calculate the premium tax credit and complete the reconciliation of the subsidy with the calculated credit.

Since the filing season begins on January 20, 2015, and a large number of the individuals who received a subsidy will not receive their copy of the Form 1095-A until the first week of February, tax preparers should not complete and file a return of an individual who obtained their health insurance through a Marketplace until they have received a copy of the Form 1095-A – allowing them to complete and include Form 8962 with the return.

Waiting for both of these forms is important because the IRS knows which individuals received a subsidy during 2014. Therefore, the IRS will be verifying that a completed Form 8962 (Premium Tax Credit) is included in the returns for those individuals. If the return does not contain the required Form 8962, the return will be held by the IRS and a notice will be sent to the taxpayer requesting the form. This will result in any refund associated with the return being delayed until Form 8962 is received by the IRS and the IRS completes the processing of the return.

If a taxpayer who should have received a Form 1095-A loses the form or did not receive it, they or the tax preparer can look up the contact information of the federal or state Marketplace where they obtained their health insurance on the Health Insurance Marketplace page of the IRS website to find out how to get a replacement copy of the Form 1095-A.

All Individual Federal Returns Will Be Affected by the Affordable Care Act
Everyone who files a 2014 federal tax return will be affected in one of the following ways by the Affordable Care Act:

  • Most individuals will only have to check the Full Year Coverage box on Form 1040 since they were covered by their employer, government program (such as Medicaid or Medicare), or private insurance purchased outside of Marketplace for all of 2014.
  • Taxpayers who obtained their health insurance at the federal or a state marketplace will:
    • Receive Form 1095-A (Health Insurance Marketplace Statement) from the federal or state Marketplace around January 31, 2015;
    • Complete Form 8962 (Premium Tax Credit) to claim the Premium Tax Credit and, if they received an advance premium tax credit (subsidy), complete the required reconciliation.
  • Taxpayers who did not have health insurance for all or part of 2014:
    • May qualify for an exemption, and if they do, will complete Form 8965 (Health Coverage Exemptions); or
    • Owe an additional tax (penalty).

To review the new Affordable Care Act forms mentioned above or for more information on the premium tax credit, exemptions, advance premium tax credit, and penalty, see the following:

Recent Tax Updates

2018 Depreciation Changes
October 18, 2018

2018 Tax Law Changes that are Directly Reported on Form 1040
October 3, 2018

IRS Tax Transcripts Changes
September 27, 2018

Revised 2018 Schedule A due to Tax Cuts and Jobs Act Changes to Itemized Deductions
August 29, 2018

2018 Expansion of Preparer Due Diligence Requirements
August 8, 2018

IRS Accepting Renewal Applications for ITINs Expiring at End of 2018
July 25, 2018

Additional Updates
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