If there’s one new line to notice on the federal tax return this year, it’s 61. Let’s call it the “Obama box,” short for the president’s signature claim to fame, the Affordable Care Act or “Obamacare.”
Line 61 on the federal 1040 return is where taxpayers testify that they are covered by some type of health insurance, whether it’s through a private source, Medicare/Medicaid or the Health Insurance Marketplace(s) created by Obamacare. (On the 1040A, see Line 38 and on the 1040EZ, it’s Line 11.)
If you and your dependents were covered by insurance for all of 2014, reporting on Line 61 is easy. Check the box and leave the space beside it blank.
If you were not covered for a month or more during the year, reporting can be much more complicated. You’ll need to claim an exemption from having insurance or you’ll need to make a “shared responsibility payment,” which is a fee for not having coverage. Both of those situations require new IRS Form 8965, which is called “Health Coverage Exemptions.” Be sure to obtain the instructions, too; you’ll need them.
Some taxpayers will find help further down on the 1040. If you bought insurance through a government-sponsored Marketplace (including MNSure in Minnesota), you will want to check Line 69. You might be able to take advantage of a tax credit for premiums you paid. There are several qualifications and you have to fill out another IRS Form, numbered 8962, but it’s worth a good look. By the way, this is where you use Form 1095-A , which the Marketplace should have sent by now.
Let us mention one more twist to the new health insurance reporting. During 2014, the government distributed advance payments of tax credits to assist some folks in paying premiums to Marketplace insurance companies. The Marketplace tells you about those advance payments on the 1095-A statement. Obviously, those early payments affect the amount of tax credits that you can claim on your return.
Recently, the system was disrupted when 800,000 taxpayers received incorrect information that could affect calculation of the premium tax credit. The government promised to send a corrected 1095-A statement to them this month. (March).
If you’d like a guide to help you through the new health insurance reporting, call or email us at EricJohn Ltd.