The Affordable Care Act passed in March of 2010. There are several provisions of this act that take effect for the 2014 tax year.
Beginning last year (2014), individual taxpayers were required to have health insurance. To help enforce this requirement, the IRS started requiring that every taxpayer report, on their 2014 tax return, whether they have been covered by health insurance for the entire year, and if not, which months they were not covered. When you bring in your information to get your taxes prepared, please let us know if you were covered by health insurance (either through your employer, the health insurance marketplace, private coverage, or Medicare).
To help subsidize the cost of insurance for certain individuals, the government offered tax credits to individuals who purchased insurance through the health insurance exchange. As you purchased the insurance, a credit was calculated based on your anticipated income and family size. Most people chose the option to use the credit immediately to pay for the monthly premiums on their health insurance.
Because the insurance credit was based on your estimated income for 2014, we must re-calculate the actual credit for your income tax return. Our recalculation is based on your actual income. Any difference between the credit calculated on your tax return and the estimated credit provided to you when you signed up for health insurance will either be an additional refund (if your actual credit is more than you originally received), or you will be required to repay a portion of the credit that you received in advance (if your estimated credit was higher than the credit based on actual income).
The IRS will be sending a Form 1095-A to all individuals who signed up for health insurance through the health insurance exchange. Please bring this form to us with your tax information so that we can properly report this information on your tax return.
If you have any questions regarding the taxability of your health insurance, health insurance credits, or any other tax or financial planning issues, please let us know. We are here for you! Call us at 386-734-9441 or email me at firstname.lastname@example.org.