Form 8962, 1095-A and More: Obamacare’s 2015 Tax Changes

This is the first in our new series of guest CPA blogs about the 2015 tax season, written by licensed tax professionals who use PDFfiller to make their businesses run more efficiently. This week’s post comes to us from David Manz of Adams Morrow Associates LLP.

The wintery weather is here, and with it the joy of the holiday season. But another season is right around the corner, and that’s tax season. As we move into 2015, more provisions of the 2010 Affordable Care Act, also known as Obamacare, will affect how you file your taxes. In this post we’ll clear up a few important, but often confusing changes that will be new for the 2015 tax season.

New IRS Healthcare Coverage Form 1095-A

If you are one of the millions of Americans who purchased healthcare coverage through a federal or state marketplace for 2014, then you may notice a new IRS form arriving in your mail by the end of January 2015. Called Form 1095-A, this form provides important tax information about the cost of health insurance and the federal subsidy that you may have received in 2014.

The Premium Tax Credit

This subsidy, known as the Premium Tax Credit (PTC), makes the cost of healthcare coverage cheaper for individuals who purchased plans through the health insurance marketplaces. Unlike most tax credits, the government pays the PTC in advance each month directly to insurers. Form 1095-A provides a report of these advance payments to the taxpayer. If you receive a 1095-A, you need to use it to complete your tax return and another new IRS form, Form 8962.

IRS Form 8962

Form 8962 reconciles the monthly Premium Tax Credit payments reported on 1095-A with your actual annual income and family size. With that information, you can determine if the subsidy payments paid to the insurer throughout the year were too high or too low. If they were too high, the IRS will take the difference from your tax refund. Conversely, if the payments weren’t enough, the marketplaces will pay out the remaining credits to you.

The Health Insurance Individual Mandate

Finally, one of the most wide-reaching changes of the Affordable Care Act is the Individual Mandate. Known officially as the “Insurance Shared Responsibility Payment”, it is a tax on individuals who do not have insurance through their employer, a government program, or an insurance marketplace.  Taxpayers had until March 31, 2014 to make sure they had healthcare coverage. For those who can’t provide proof of coverage with their tax returns, the IRS will take a penalty from their tax refund. The penalty is either 1% of income above your filing status threshold or a flat rate per family member, whichever amount is greater. For the IRS calculation of the exact penalty, see their page about the Individual Mandate. While there are some exemptions from this penalty, most Americans must either have coverage or pay the Individual Mandate when they file their 2014 taxes.

Looking Ahead to the 2015 Tax Season

It’s important to keep ahead of tax changes as more of the ACA healthcare law comes into effect. Consult a licensed tax professional if you’re unsure about your tax return or how the new healthcare law might affect your filing.

Our firm Adams Morrow Associates LLP has been serving our clients’ tax preparation needs since 1999, and during the 2014 tax season we began using PDFfiller’s form database for easy access to thousands of common IRS forms online. PDFfiller has made signing completed tax forms incredibly easy, and has helped us to achieve faster document turnaround and organizational efficiency in our business. We look forward to hearing from individuals needing assistance during this upcoming tax season!