Category Archives: Affordable Care Act

   IRS and Security Summit Partners Warn of Fake Tax Bills

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WASHINGTON — The Internal Revenue Service and its Security Summit partners today issued an alert to taxpayers and tax professionals to be on guard against fake emails purporting to contain an IRS tax bill related to the Affordable Care Act.

The IRS has received numerous reports around the country of scammers sending a fraudulent version of CP2000 notices for tax year 2015. Generally, the scam involves an email that includes the fake CP2000 as an attachment. The issue has been reported to the Treasury Inspector General for Tax Administration for investigation.

The CP2000 is a notice commonly mailed to taxpayers through the United States Postal Service. It is never sent as part of an email to taxpayers. The indicators are:

  • These notices are being sent electronically, even though the IRS does not initiate contact with taxpayers by email or through social media platforms;
  • The CP2000 notices appear to be issued from an Austin, Texas, address;
  • The underreported issue is related to the Affordable Care Act (ACA) requesting information regarding 2014 coverage;
  • The payment voucher lists the letter number as 105C.

The fraudulent CP2000 notice included a payment request that taxpayers mail a check made out to “I.R.S.” to the “Austin Processing Center” at a Post Office Box address. This is in addition to a “payment” link within the email itself.

IRS impersonation scams take many forms: threatening telephone calls, phishing emails and demanding letters. Learn more at Reporting Phishing and Online Scams.

Taxpayers or tax professionals who receive this scam email should forward it to phishing@irs.gov  and then delete it from their email account.

Taxpayers and tax professionals generally can do a keyword search on IRS.gov for any notice they receive. Taxpayers who receive a notice or letter can view explanations and images of common correspondence on IRS.gov at Understanding Your IRS Notice or Letter.

To determine if a CP2000 notice you received in the mail is real, see the Understanding Your CP2000 Notice, which includes an image of a real notice.

A CP2000 is generated by the IRS Automated Underreporter Program when income reported from third-party sources such as an employer does not match the income reported on the tax return. It provides extensive instructions to taxpayers about what to do if they agree or disagree that additional tax is owed.

It also requests that a check be made out to “United States Treasury” if the taxpayer agrees additional tax is owed. Or, if taxpayers are unable to pay, it provides instructions for payment options such as installment payments.

The IRS and its Security Summit partners — the state tax agencies and the private-sector tax industry — are conducting a campaign to raise awareness among taxpayer and tax professionals about increasing their security and becoming familiar with various tax-related scams. Learn more at Taxes. Security. Together. or Protect Your Clients; Protect Yourself.

Taxpayers and tax professional should always beware of any unsolicited email purported to be from the IRS or any unknown source. They should never open an attachment or click on a link within an email sent by sources they do not know.

   Ten Income Tax Benefits for Farmers

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Farming has often been viewed as the backbone of the American economy. While technology and other recent developments may have changed this thinking, farmers still enjoy a preferred status, at least as federal income taxes are concerned. For instance, there are several special tax code provisions relating to farming, most of them beneficial. At the same time, taxpayers in the agriculture field may be in line for the same tax breaks available to businesses in general.

What sort of tax provisions are we talking about? Periodically, the IRS provides insights through online postings. Here are ten items that may be of interest.

1. Depreciation deductions: Like other businesses, farmers can take advantage of enhanced writeoffs for property placed in service in 2017. Specifically, a farmer may claim a maximum expensing deduction of $510,000 under Section 179, subject to a phase-out for acquisitions above $2,030,000, plus 50% “bonus” depreciation on qualified property.

2. Crop insurance proceeds: Crop insurance may be purchased by farmers to protect against losses caused by natural disasters –such as hail, drought and floods — or lost revenue due to declines in prices of agricultural commodities. However, the proceeds generally have to be reported as income in the year they are received.

3. Sales due to weather: On a related note, if a farmer sells more livestock and poultry than would normally occur in a year because of weather-related conditions, the business gets a reprieve: It can postpone reporting the gain from sales of the additional animals due to the weather until the next year.

4. Farm income averaging: Regular income averaging has gone by the boards, but farmers may still average all or some of the current year’s farm income by allocating it to the three prior years. This may lower tax for the current year tax if current income from farming is high and taxable income from one or more of the three prior years was low.

5. Deductible farm expenses: As with other businesses, farmers may write off ordinary and necessary costs of operating a farm for profit. An “ordinary” expense is one that is common and accepted in the farming business, while a “necessary” expense must be appropriate for the business.

6. Employees and hired help: Similarly, a farmer can deduct reasonable wages paid for labor hired to perform farming operations. This includes both full-time and part-time workers. Of course, the business is responsible for withholding income and payroll taxes for its employees.

  1. Items purchased for resale: Not all farm products are home-grown. Farmers may to deduct the cost of items purchased for resale in the year the sale occurs. This includes livestock and freight charges for transporting the livestock to the farm.

8. Net operating losses: If the deductions claimed by a farming operation exceed its profits, it may report a net operating loss (NOL) for the year. The NOL can be carried back for two years and then forward for up to 20 years to offset income in other years. As a result, the farm business may be entitled to a refund from a prior year or benefit from a tax reduction in a future year.

9. Loan repayments: When a taxpayer takes out a personal loan, he or she can’t deduct interest on the subsequent loan repayments. However, if loan proceeds are used in a farming business, the taxpayer may deduct the interest paid on the loan on the farm’s tax return.

10: Fuel and road use: Finally, farmers may be able to claim a credit or refund of federal excise taxes on fuel used on a farm for farming purposes. Other taxpayers often illegally claim this off-road credit, but it’s legitimate for those in the farming industry.

 

Ken Berry

   How Will the Proposed Healthcare Reform Affect Reporting?

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Most Americans are aware that the House of Representatives recently passed the “American Health Care Act” (AHCA).  But what does this mean? First of all, the Affordable Care Act (ACA), or Obamacare, is not necessarily going away.

There is a process that the AHCA (and any House-approved bill) must first complete before becoming law.  This process includes a review and likely revisions by the Senate.  If the Senate passes a bill different from the House version, either the bill goes to Committee to address the differences or the House would have to pass the Senate’s bill. Only after these steps could an ACA replacement bill be forwarded to the President for his signature, and then to the Internal Revenue Service (IRS) for proper implementation of the law.

Most significant to note is the fact that as written, the AHCA does not eliminate the 1094 and 1095  reporting requirements implemented by the ACA. As it currently stands, businesses and issuers will still be required to report employee and individual healthcare coverage to the IRS.

The AHCA immediately eliminates the penalties associated with both the individual and employer mandates originally required by ACA.  However, replacing the individual mandate would be a new continuous coverage requirement. Issuers offering plans in the individual market will be required to assess a 30 percent penalty on policyholders who either had a gap in coverage that exceeded 63 days in the prior 12 months or who aged out of their dependent coverage (young adults up to age 26) and did not enroll in coverage during the next open enrollment period. This provision would be effective for coverage obtained during special enrollment periods for plan year 2018 and for all coverage beginning plan year 2019.

The AHCA also modifies the premium tax credit for 2018 and 2019 so that the premium tax credit can be used to purchase qualified health plans sold outside of the Exchange.  If minimum essential coverage provided to an individual consists of a qualified health plan not enrolled through an Exchange, a return must be issued that includes: a) a statement that the plan is a qualified health plan; b) the premiums paid with respect to the coverage; c) the months during which the coverage is provided to the individual; and d) the adjusted monthly premium for the applicable second lowest cost silver plan for each month for the individual.

Starting in 2020, the ACA’s Exchange subsidies will be replaced with an age-banded tax credit:

    • $2,000/year for anyone under age 30
    • $2,500/year for ages 30-39
    • $3,000/year for ages 40-49
    • $3,500/year for ages 50-59
    • $4,000/year for age 60 and over

Additional AHCA Updates Include:

  • Delays the “Cadillac Tax” until 2026. ACA’s Cadillac Tax was to begin in 2018 and impose a 40% excise tax on high-cost employer-sponsored coverage.
  • Form W-2 may include information that tracks each month an employee is eligible for a group plan.
  • The annual tax-free contribution limit on HSAs can be increased to match the maximum out-of -pocket costs on high-deductible health plans.

The bill’s next stop is the Senate, where it will be considered, or even more likely, they may draft their own version of a bill and ultimately vote. While it is certainly possible that the employer and individual mandates will be repealed, there is also the possibility of alternative scenarios where individuals must prove coverage to avoid a penalty or qualify for a credit.

   The IRS Taxpayer Bill of Rights and You

Taxpayers have fundamental rights under the law. The Taxpayer Bill of Rights presents these rights in 10 categories, which can help taxpayers when they interact with the IRS. This post highlights a list of taxpayer rights and the agency’s obligations to protect them.

1. The Right to Be Informed.
Taxpayers have the right to know what is required to comply with the tax laws. They are entitled to clear explanations of the laws and IRS procedures in all tax forms, instructions, publications, notices and correspondence. They have the right to know about IRS decisions affecting their accounts and clear explanations of the outcomes.

2. The Right to Quality Service.
Taxpayers have the right to receive prompt, courteous and professional assistance in their dealings with the IRS and the freedom to speak to a supervisor about inadequate service. Communications from the IRS should be clear and easy to understand.

3. The Right to Pay No More than the Correct Amount of Tax.
Taxpayers have the right to pay only the amount of tax legally due, including interest and penalties. They should also expect the IRS to apply all tax payments properly.

4. The Right to Challenge the IRS’s Position and Be Heard.
Taxpayers have the right to object to formal IRS actions or proposed actions and provide justification with additional documentation. They should expect that the IRS will consider their timely objections and documentation promptly and fairly. If the IRS does not agree with their position, they should expect a response.

5. The Right to Appeal an IRS Decision in an Independent Forum.
Taxpayers are entitled to a fair and impartial administrative appeal of most IRS decisions, including certain penalties. Taxpayers have the right to receive a written response regarding a decision from the Office of Appeals. Taxpayers generally have the right to take their cases to court.

6. The Right to Finality.
Taxpayers have the right to know the maximum amount of time they have to challenge an IRS position and the maximum amount of time the IRS has to audit a particular tax year or collect a tax debt. Taxpayers have the right to know when the IRS concludes an audit.

7. The Right to Privacy.
Taxpayers have the right to expect that any IRS inquiry, examination or enforcement action will comply with the law and be no more intrusive than necessary. They should expect such proceedings to respect all due process rights, including search and seizure protections. The IRS will provide, where applicable, a collection due process hearing.

8. The Right to Confidentiality.
Taxpayers have the right to expect that their tax information will remain confidential. The IRS will not disclose information unless authorized by the taxpayer or by law. Taxpayers should expect the IRS to take appropriate action against employees, return preparers and others who wrongfully use or disclose their return information.

9. The Right to Retain Representation.
Taxpayers have the right to retain an authorized representative of their choice to represent them in their dealings with the IRS. Taxpayers have the right to seek assistance from a Low Income Taxpayer Clinic if they cannot afford representation.

10. The Right to a Fair and Just Tax System.
Taxpayers have the right to expect fairness from the tax system. This includes considering all facts and circumstances that might affect their underlying liabilities, ability to pay or ability to provide information timely. Taxpayers have the right to receive assistance from the Taxpayer Advocate Service if they are experiencing financial difficulty or if the IRS has not resolved their tax issues properly and timely through its normal channels.
The IRS will include Publication 1 when sending a notice to taxpayers on a range of issues, such as an audit or collection matter. IRS offices display the rights for taxpayers and employees to see.
Publication 1 is available in English, Chinese, Korean, Russian, Spanish and Vietnamese.
All taxpayers should keep a copy of their tax return. Beginning in 2017, taxpayers using a software product for the first time may need their Adjusted Gross Income (AGI) amount from their prior-year tax return to verify their identity. Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return.

   Deadline Extended to Provide Health Coverage Statements to Employees

The IRS extended the 2017 due date for employers and coverage providers to furnish health coverage statements to individuals. The due dates to file those returns with the IRS are not extended. This chart can help you understand the upcoming deadlines.

(This chart applies only for reporting in 2017 for coverage in 2016)

 

Action

2017 Reporting Due Dates for…
Applicable Large Employers – Including Those That Are Self-Insured Self-insured Employers That Are Not Applicable Large Employers Coverage Providers  – other than Self-Insured Applicable Large Employers*
 

Provide 1095-B to responsible individuals

 

 

Not Applicable**

 

Mar. 2

 

Mar. 2

 
File 1094-B and  1095-B with the IRS Not Applicable** Paper: Feb. 28

E-file: Mar. 31*

Paper: Feb. 28

E-file: Mar. 31*

 
Provide 1095-C to full-time employees Mar. 2 Not Applicable Not Applicable
 
File 1095-C and 1094-C with the IRS Paper: Feb. 28

E-file: Mar. 31*

Not Applicable

 

Not Applicable

 

* If you file 250 or more Forms 1095-B or Forms 1095-C, you must electronically file them with the IRS. Electronically filing ACA information returns requires an application process separate from other electronic filing systems. Additional information about electronic filing of ACA Information Returns is on the Affordable Care Act Information Reporting (AIR) Program page on IRS.gov and in Publications 5164 and 5165.

** Applicable large employers that provide employer-sponsored self-insured health coverage to non-employees may use either Forms 1095-B or Form 1095-C to report coverage for those individuals and other family members.

And remember, your local Dallas CPA Firm can always answer any questions you might have.  So contact us today!

   Seasonal Workers and Health Care Laws

As an employer, your size – for purposes of the Affordable Care Act –  is determined by the number of your employees. If you hire seasonal or holiday workers, you should know how these employees are counted under the health care law.

Employer benefits, opportunities and requirements are dependent upon your organization’s size and the applicable rules. If you have at least 50 full-time employees, including full-time equivalent employees, on average during the prior year, you are an ALE (Applicable Large Employer) for the current calendar year.  However, there is an exception for seasonal workers.

If you have at least 50 full-time employees, including full-time equivalent employees, on average during the prior year, your organization is an ALE. Here’s the exception: If your workforce exceeds 50 full-time employees for 120 days or fewer during a calendar year, and the employees in excess of 50 during that period were seasonal workers, your organization is not considered an ALE. For this purpose, a seasonal worker is an employee who performs labor or services on a seasonal basis.

The terms seasonal worker and seasonal employee are both used in the employer shared responsibility provisions, but in two different contexts. Only the term seasonal worker is relevant for determining whether an employer is an applicable large employer subject to the employer shared responsibility provisions.  For information on the difference between a seasonal worker and a seasonal employee under the employer shared responsibility provisions see our Questions and Answers page.

See the Determining if an Employer is an Applicable Large Employer page on IRS.gov/aca for details about counting full-time and full-time equivalent employees. You can also see our Health Care Law: Highlights for Applicable Large Employers video on the IRS YouTube channel’s Health Care playlist. IRS.gov/aca also has information that can answer your employees’ questions about the health care law. The best way to find out about seasonal workers and health care laws? Ask you local Dallas CPA Firm!

   10 Easy End of Year Tax Tips to Increase Your Tax Refund

It’s hard to believe that the holiday season is already upon us and the year will be coming to a close soon! Now is a great time to make some end of season tax moves to help lower your tax bill and increase your tax refund come tax time. Once the year ends, so do most of your opportunities to reduce your 2016 taxes.

Here are 10 quick and easy end of year tax tips you still have time to take advantage of:

1. Get organized. Sooner rather than later! It’s never too early to gather receipts for tax deductible expenses and sources of income. Doing it now will help you ensure you’re not forgetting anything significant and help you see a better snapshot of your finances ahead of the new year.

2. Defer Bonuses. If your hard work paid off this year and you are expecting a year-end bonus, this extra money in your pocket may bump you up to another tax bracket and increase your tax liability. If you can hold off on seeing any extra income this year, see if your boss will pay you your bonus in January. You will still receive it close to year-end, but you won’t have to pay taxes on it when you file your 2016 taxes.

3. Accelerate Deductions & Defer Income. There are a handful of tax deductions that are recognized the year in which you pay them. For example, if you own a home and get a mortgage interest deduction, and if you make an extra mortgage payment on December 31, you can claim that additional tax deduction on this year’s taxes. This lets you take the deduction immediately rather than wait an additional 12 months, when you do your taxes for next year.

4. Donate to charity. The holidays are a great time to clean out clothes and household goods while giving to those in need. You can help someone in need and reap benefits of a tax deduction for non-cash and monetary donations donated to a qualified charitable organization. If you volunteer at a qualified charitable organization, don’t forget that you can deduct your mileage (14 cents of every mile) driven to charitable service. Make these donations count on your taxes by donating by December 31st. Even if you make a donation by credit card, you do not have to pay it off in 2016 to receive the tax deduction.

5. Take a class. Taking a course to advance your career and build your business is also a great way to boost your tax refund. Paying for next quarter’s tuition by December 31st may give you a valuable tax credit up to $2,000 with the Lifetime Learning Credit.

6.  Maximize your retirement. Another great way to reduce your taxable income while building your nest egg is to make a contribution to your retirement savings account. Whether you contribute to a 401(k) or a Traditional IRA, you can take a dollar for dollar reduction in your income and also save for the future. Additionally, the self-employed who contribute to SEP IRAs can deduct up to 25% of compensation or $53,000 for 2016.

7.  Spend your FSA. If you have a Flexible Spending Account and you have money left, get caught up on your doctor’s visits. The old “Use it or lose it” rule may not still apply, but if you have unused money in your FSA account on December 31st, you may only be able to carry over up to $500 into your 2016 FSA or your plan may limit the amount of time to 2 1/2 months after the end of the plan year to use your funds.

8. Buy low, sell low? Chances are you have a few investments in your portfolio that have gone down in value, but did you know you can recognize your losses and use them to offset investment winners? To do this, you need to sell the losing investments and offset your losses against your gains recognized. If your losses exceed your gains, you can apply $3,000 of that against your regular income. Any extra will then be passed onto the next tax year.

9. Estimate your household income for Marketplace Insurance. Are you applying for a subsidy or discounted insurance in the Health Insurance Marketplace this open enrollment season? If so, you will have to project your 2017 household income and family size when you apply. Start looking into any changes that may take place in 2017 (growing your family, job promotion, heading into retirement, etc.) These changes may affect the amount of subsidy you are given to help you pay for insurance.

10.  Increase Your Marketplace Premium Tax Credit. If you received assistance for Marketplace Insurance in the form of an Advanced Premium Tax Credit, one smart move you can make is to lower your adjustable gross income by contributing to your retirement plan, which may increase the premium tax credit you’re eligible for when you file your 2016 taxes.

And of course the best tip is to contact your local Dallas CPA Firm.  CPA’s can advise you and tailor personal tax strategies based on your income, family, life events, and so much more.  So give us a call today!

   Guide to Marketplace Open Enrollment

Marketplace Open Enrollment for 2017 health insurance is just around the corner, and whether you sign up for health insurance on healthcare.gov or through your state Marketplace, your local Dallas CPA is here to help guide you through the process. Whether you have had a change in life circumstance, are self-employed and need access to health insurance, or just shopping for an affordable plan, read on for information and tools that can help you enroll in a 2017 health insurance plan that makes sense for you, your family, and your budget.

Open Enrollment Dates

For 2017 health insurance coverage, Open Enrollment runs from November 1, 2016 to January 31, 2017. If you want your coverage to take effect on January 1, 2017, make sure to select your plan by December 15, 2016.

Helpful Tools for Open Enrollment

Selecting an insurance plan is an important financial decision. There are many free tools and calculators to arm you with all the information you need to choose the level of health care coverage that makes the most financial sense for you and your family.

The IRS has a free online tool that lets you know if you may qualify for a subsidy, or premium tax credit (assistance from the government), for 2017 and estimates how much you may receive to help pay your monthly health insurance premiums. Make sure to calculate your expected household income for the next year carefully, which is needed to figure how much assistance you may be eligible for to help pay for health insurance. Some consumers end up paying some money back on their tax returns if they underestimated their projected income. The more closely you calculate your household income, the easier it is to avoid any surprises come tax season. And if you received an advanced premium tax credit to help you pay for 2016 health insurance, your CPA will figure out if you are eligible for a bigger premium tax credit or have to pay some back when you file your taxes. No need to worry.

Penalty for Going without Coverage to Increase — Exemptions Can Help

Based on last year, it is expect that nearly 40% of uninsured tax filers will qualify for a penalty exemption on their tax returns for 2016, so it’s definitely worth checking into. Check out the IRS free online tool to determine if you’re eligible for an exemption.

If you don’t qualify for an exemption, the penalty is 2.5% of your total household adjusted gross income, or $695 per adult ($347.50 per child), whichever is higher (with a maximum of $2,085). For 2017 and beyond, the percentage option will remain at 2.5%, but the flat fee will include a cost-of-living adjustment.

Shopping around during this Open Enrollment will allow you to look for an affordable plan and could help you avoid paying a tax penalty when you file your 2017 taxes.

Reporting Coverage on Taxes

This is the third year taxpayers must report their health insurance status on tax returns, but there’s no reason to worry – this tax year will be just as simple as last year.

If you purchased a health insurance plan on healthcare.gov (CuidadodeSalud.gov for Spanish speakers) or your state Marketplace, you will receive Form 1095-A, which confirms coverage, premiums and any subsidies you received to help pay for health insurance.

People who were insured through their employer, a government program such as Medicaid, or other private insurance, will most likely receive a new tax form (1095-B or -C) confirming coverage or offer of coverage. If you receive these forms, simply review the forms for accuracy and keep the 1095-B or -C for your records – that’s it. You don’t need to wait for these forms to file your 2016 taxes.

Your local Dallas CPA is always up to date with the latest tax laws, and will continue to keep you informed so you have the latest information on how the ACA might affect you and your taxes. If you have more questions about the Affordable Care Act and your taxes, call your CPA today!

   IRS Warns of Email Tax Scam

The Internal Revenue Service and its Security Summit partners have issued an alert to taxpayers to be on guard against fake emails purporting to contain an IRS tax bill related to the Affordable Care Act.

The IRS has received numerous reports around the country of scammers sending a fraudulent version of CP2000 notices for tax year 2015. Generally, the scam involves an email that includes the fake CP2000 as an attachment. The issue has been reported to the Treasury Inspector General for Tax Administration for investigation.

The CP2000 is a notice commonly mailed to taxpayers through the United States Postal Service. It is never sent as part of an email to taxpayers. The indicators are:

  • These notices are being sent electronically, even though the IRS does not initiate contact with taxpayers by email or through social media platforms;
  • The CP2000 notices appear to be issued from an Austin, Texas, address;
  • The underreported issue is related to the Affordable Care Act (ACA) requesting information regarding 2014 coverage;
  • The payment voucher lists the letter number as 105C.

The fraudulent CP2000 notice included a payment request that taxpayers mail a check made out to “I.R.S.” to the “Austin Processing Center” at a Post Office Box address. This is in addition to a “payment” link within the email itself.

IRS impersonation scams take many forms: threatening telephone calls, phishing emails and demanding letters. Learn more at Reporting Phishing and Online Scams. Taxpayers who receive this tax scam email should forward it to phishing@irs.gov and then delete it from their email account.

Taxpayers can do a keyword search on IRS.gov or contact their local Dallas CPA firm for any notice they receive. Taxpayers who receive a notice or letter can view explanations and images of common correspondence on IRS.gov at Understanding Your IRS Notice or Letter.

To determine if a CP2000 notice you received in the mail is real, see the Understanding Your CP2000 Notice, which includes an image of a real notice. A CP2000 is generated by the IRS Automated Underreporter Program when income reported from third-party sources such as an employer does not match the income reported on the tax return. It provides extensive instructions to taxpayers about what to do if they agree or disagree that additional tax is owed. It also requests that a check be made out to “United States Treasury” if the taxpayer agrees additional tax is owed. Or, if taxpayers are unable to pay, it provides instructions for payment options such as installment payments.

The IRS and its Security Summit partners — the state tax agencies and the private-sector tax industry — are conducting a campaign to raise awareness among taxpayers about increasing their security and becoming familiar with various tax-related scams. Learn more at Taxes. Security. Together.

Taxpayers should always beware of any unsolicited email purported to be from the IRS or any unknown source. They should never open an attachment or click on a link within an email sent by sources they do not know. They should also remember that their local Dallas CPA firm is always there to help when questions or concerns arise.

   Still Need to File Your 2015 Taxes? File Now to Get Your 2017 Health Insurance APTC

Did You File a Tax Extension?  File Now to Get Your Health Insurance Advanced Premium Tax Credit

Did you apply for an extension of time to file your 2015 federal taxes and receive an advanced premium tax credit to help you pay for your 2016 health insurance?  If the answer is yes, the IRS urges you to file your 2015 taxes as soon as possible, in order to receive a timely advanced premium tax credit from your Marketplace for the next open enrollment period (2017 health insurance).

If I Filed a Tax Extension Why Do I have to File Before the October 15 Extended Tax Deadline?

Even if you received a six month extension of time to file, you should still file your 2015 taxes as soon as possible to report 2016 advance premium tax credits you received and maintain your eligibility for future premium assistance to help you pay for your Marketplace insurance since the Marketplace will not review your eligibility for advance premium tax credits and cost-sharing reductions for 2017 health insurance coverage unless you file.

Under the Affordable Care Act, when you purchase your health insurance from a Health Insurance Marketplace and receive an advanced premium tax credit, your advanced premium tax credit is reported and compared to the actual premium tax credit you are eligible for. Depending on your actual income and family size, you may receive a bigger tax credit or may have to pay some back when you file your taxes, just like when your actual withholding is compared to your tax liability.

How Do I Report My Advanced Premium Tax Credit?

You should have received a 2015 Form 1095-A from the Health Insurance Marketplace (Healthcare.gov or your state exchange). The form  indicates information like date of coverage, amount of insurance premium, and your advanced premium tax credit applied to your insurance.

Are There Tips if I Filed an Extension and Received an Advanced Premium Tax Credit?

First, don’t be afraid to jump in and file your 2015 taxes as soon as possible, if you want to qualify for an advanced premium tax credit to help you pay for 2017 health insurance.  Also, don’t forget about any IRA contributions or other deductions that may lower your adjusted gross income, increasing the possibility of a bigger premium tax credit.

Your circumstances may have changed in the past year and you may now be eligible for an exemption from the tax penalty if you didn’t  have a full year of 2015 health coverage. Exemptions can range from income being below the IRS tax-filing threshold to hardship exemptions like losing your home to foreclosure. You can check out the IRS free exemption tool to find out if you might be eligible for one of the exemptions.  Some exemptions – such as only having access to health insurance plans that exceed 8 percent of household income – can be claimed directly on your tax return. But other exemptions, including hardship cases, require that you apply through a state or federal Health Insurance Marketplace to receive an exemption certificate number.

As with all the tax laws, your local Dallas CPA Firm is always up to date and has you covered. If you have more questions about the Affordable Care Act and how it impacts you, give us a call!