Taxpayers are confused as to how to file his/hers individual tax return because of the health care law. This confusion is understandable because forms that taxpayers were originally told were needed to file regarding health care will not be available until March 31.
This is an effort to assist taxpayers to have the correct facts to file his/hers individual tax return.
● What is the source of the confusion?
Health insurance providers are mandated to issue a form to taxpayers that serve as proof of mandated insurance coverage to the IRS. Called a Form 1095, this form was originally supposed to be in the hands of taxpayers by February 1, 2016. Because a determination was made that providers needed more time to file the Form 1095, an extension was granted to March 31, 2016.
Prior to the extension, taxpayers were led to believe that having a Form 1095 as proof of insurance was important to have to file not unlike a Form W-2.
Now that the Form 1095 will arrive only weeks before the April deadline, taxpayers are confused as to how to file a tax return.
● Must a taxpayer wait to receive a Form 1095 before filing?
The IRS is saying no unless you are expecting to claim a tax credit on your tax return.
If you have other information to provide proof of health insurance, and are not expecting a tax credit, a taxpayer does not have to wait until receiving a Form 1095 to file his/her tax return.
● What does all this mean for individual taxpayers?
The bottom line is that most individuals are not affected! Go ahead and file NOW just like last year!
After preaching all throughout 2015 about how important the IRS proof of insurance form was going to be in order to file, the IRS reversed its position just as the filing season was just beginning.
Here is the IRS ACA Q&A page where many answers on this confusion can be found:
Kasperek & Co. Accountants has been concerned about how this “about- face” by IRS may be confusing taxpayers. Kasperek & Co. Accountants is providing this information as part of our continuing efforts to share our knowledge of the health care law and help taxpayers!