Before you file your 2014 federal taxes, you should be aware of how the affordable care act will impact your return. Depending on if you have health care coverage and where you received it from, you may notice a larger impact this tax season.
Many taxpayers have healthcare coverage through their employers, government provided plans such as Medicaid and Medicare, or private qualifying insurance. If you fall under this category you will only need to check the box for Full Year Coverage on form 1040, line 61.
Otherwise, if you've obtained your coverage through the Health Insurance marketplace via a state or federal exchange, you have a little more legwork when filing. First, you will receive a Form 1095-A (health insurance marketplace statement) by mail no later than January 31st, 2015. This form will include all the necessary details to complete your premium tax credit reconciliation. This is required if you received an advance premium tax credit to help offset the cost of monthly premiums for health insurance.
After receiving the Form 1095-A, you'll need to calculate the difference between your advance premium tax credit and the actual amount allotted to you by using Form 8962 (Premium Tax Credit). You'll need to determine the amount of your premium tax credit based on your income and family size for the year. You then subtract this amount from the information contained in Part III of the Form 1095-A, regarding the advanced premium tax credit you received.
This will result in one of two conclusions. Either:
- You will be entitled to a refundable credit because your actual tax credit is greater than the subsidy that you received. Form 1040, line 69.
- You will owe an additional tax if the amount you receive dis greater than you were allotted. Form 1040, line 46.
If you didn't have health insurance coverage for the year you will have to either claim a health coverage exemption on form 8965 or pay a penalty. The penalty is calculated on Form 1040, line 61. Some taxpayers have to file Form 8962, Form 8965, and pay a penalty depending on the status of their health insurance for the tax year.