ACA and Filing IRS 1040 Tax Returns

Posted by BAS - 18 February, 2021

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The Tax Cuts and Jobs Act reduced the Affordable Care Act individual shared responsibility payment to $0.00 starting with the January 1, 2019 tax year.  Form 1040 no longer has the “full-year health coverage or exempt” box and Form 8965- Health Coverage Exemptions- is no longer used. There has been no federal penalty for not having health insurance since 2019, so a taxpayer does not have to make a shared responsibility payment when filing a federal tax return if the taxpayer does not have minimum essential coverage for all or part of 2020. However, certain states and jurisdictions have enacted their own health insurance mandates and may impose tax penalties.

If an individual enrolled in coverage through the Marketplace, the individual will need the information on Form 1095-A to complete Form 8962 to reconcile any advance payments of the premium tax credit or claim the premium tax credit. Although information from the Form 1095-C – information about an offer of employer provided coverage - can assist an individual in determining eligibility for the premium tax credit, it is not necessary to have Form 1095-C to file a return.

The changes to the individual mandate did not change an employer or health coverage provider’s responsibility to prepare and issue 1095 Forms identifying coverage and offers of coverage. Employees may have questions when they receive Form 1095-B/C. The IRS suggests referring the employee to its website which explains who should expect to receive the forms, how they can be used, and how to file tax returns without the forms. Individuals are not required to send the IRS information forms or other proof of health care coverage when filing a federal tax return for 2020.

Topics: Health Care Reform (ACA), Affordable Care Act, HR & Benefit Plans, HR & Benefits News


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