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!