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Individual’s 2014 Federal Return and the Affordable Care Act

November 19, 2014


As we get closer to the beginning of the 2015 filing season, it is important to understand how the Affordable Care Act will impact every individual who files a 2014 federal return. They may be impacted in a small way or major way depending on their health insurance status and where they obtained their health insurance during 2014.

Since the majority of taxpayers will be covered for the entire year by their employer, a government sponsored plan (such as Medicaid or Medicare), or from other qualifying health insurance, they will only need to check the Full Year Coverage Checkbox on Form 1040, line 61.

Taxpayers who purchased their health insurance at the Marketplace (State or Federal Exchange) will need to do the following:

  • Taxpayer will receive by mail a Form 1095-A (Health Insurance Marketplace Statement) from the Marketplace. This information return should be received by the taxpayer by January 31, 2015 and will include details needed to complete the premium tax credit and do the reconciliation if they received an advance premium tax credit (subsidy) that helped pay their monthly health insurance premiums during 2014.

  • Complete Form 8962 (Premium Tax Credit)

    • Calculate the premium tax credit based on their 2014 income and family size.
    • Enter the advance premium tax credit (subsidy) information from Form 1095-A, Part III, if applicable.
    • Reconcile the actual premium tax credit with the subsidy they received during 2014 which will result in:
      • Refundable Credit – Calculated credit is greater than subsidy received which will go to Form 1040, line 69;

        Or

      • Additional Tax – Subsidy received is greater than calculated credit which will go to Form 1040, line 46.

Taxpayers who did not have health insurance for 2014 will do one of the following:

    • Complete Form 8965 (Health Coverage Exemptions) to claim an exemption from the health care coverage requirement;

      Or

    • Have to pay shared responsibility payment (penalty) which will be calculated according to a worksheet in the Form 8965 instructions and entered on Form 1040, line 61.

It should be noted that some individuals may have to file both the Form 8962, Form 8965, and may have a penalty due, or any combination thereof based on their individual or family member health insurance status during 2014.

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

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