Affordable Care Act (ACA) - Tax Aid · Reporting Changes in Circumstances Examples: •Family size...

Affordable Care Act (ACA)

Presented by Francis Sameon

www.tax-aid.orgRevised 1/14/16

Tax-Aid Disclaimer

• This summary provides basic information regarding basic tax law. Nothing in this summary supplants or replaces the requirements of the tax code. This summary is not intended as a substitute for advice from a taxpayer’s own legal and financial advisors.

• Additional information about tax law can be found on www.IRS.gov

www.tax-aid.org revised 1/14/16

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This summary provides basic information regarding basic tax law. Nothing in this summary supplants or replaces the requirements of the tax code. This summary is not intended as a substitute for advice from a taxpayer's own legal and financial advisors. Additional information about tax law can be found on www.irs.gov.

Agenda

• Background

• Individual shared responsibility provision

• Premium tax credit

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This summary provides basic information regarding basic tax law. Nothing in this summary supplants or replaces the requirements of the tax code. This summary is not intended as a substitute for advice from a taxpayer's own legal and financial advisors. Additional information about tax law can be found on www.irs.gov.

Individual Shared Responsibility

Report Health Care coverage Claim Exemption coverage Make shared responsibility payment

Reporting Coverage

Check box and leave entry space blank if everyone on the return had coverage for the full year

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This summary provides basic information regarding basic tax law. Nothing in this summary supplants or replaces the requirements of the tax code. This summary is not intended as a substitute for advice from a taxpayer's own legal and financial advisors. Additional information about tax law can be found on www.irs.gov.

Information Statements

•Marketplace - Form 1095-A, Health Insurance Marketplace Statement

•Insurers - Form 1095-B, Health Coverage

•Large Employers – Form 1095-C, Employer-Provided Health Insurance Coverage and Offer

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This summary provides basic information regarding basic tax law. Nothing in this summary supplants or replaces the requirements of the tax code. This summary is not intended as a substitute for advice from a taxpayer's own legal and financial advisors. Additional information about tax law can be found on www.irs.gov.

Coverage Exemptions

• Coverage Exemptions only available at filing

•Coverage Exemptions only available through the Marketplace

•Coverage Exemptions from Marketplace or IRS

• Submit form 8965 with federal return to claim coverage

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This summary provides basic information regarding basic tax law. Nothing in this summary supplants or replaces the requirements of the tax code. This summary is not intended as a substitute for advice from a taxpayer's own legal and financial advisors. Additional information about tax law can be found on www.irs.gov.

2015 Coverage Exemptions

www.tax-aid.org revised 1/14/16

8This summary provides basic information regarding basic tax law. Nothing in this summary supplants or replaces the requirements of the tax code. This summary is not intended as a substitute for advice from a taxpayer's own legal and financial advisors. Additional information about tax law can be found on www.irs.gov.

How is the 2015 Payment Calculated?

• For the year, based on the greater of the calculated:

– percentage of income (2%) or

–flat dollar amount ($325 per adult)

•Limited to maximum of $975 per household

• Prorated for months without coverage/exemption

• Cannot exceed the national average premium for bronze level health plans

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This summary provides basic information regarding basic tax law. Nothing in this summary supplants or replaces the requirements of the tax code. This summary is not intended as a substitute for advice from a taxpayer's own legal and financial advisors. Additional information about tax law can be found on www.irs.gov.

2015: What You Need to Know

• Forms 1095-A, B and C

• Apply for Marketplace exemptions early

• ISRP amounts increase

• 2016 Marketplace enrollment

–Nov 1, 2015 to January 31, 2016

–Special Enrollment Periods

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This summary provides basic information regarding basic tax law. Nothing in this summary supplants or replaces the requirements of the tax code. This summary is not intended as a substitute for advice from a taxpayer's own legal and financial advisors. Additional information about tax law can be found on www.irs.gov.

Return Preparer Interview Best Practices

• Use Form 1095-A, B or C to

–verify coverage months and

–who is covered

• Determine eligibility for exemption

–Marketplace ECN

–Income below return filing threshold or

–IRS coverage exemptions

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This summary provides basic information regarding basic tax law. Nothing in this summary supplants or replaces the requirements of the tax code. This summary is not intended as a substitute for advice from a taxpayer's own legal and financial advisors. Additional information about tax law can be found on www.irs.gov.

Agenda

• Background

• Individual shared responsibility provision

• Premium tax credit

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This summary provides basic information regarding basic tax law. Nothing in this summary supplants or replaces the requirements of the tax code. This summary is not intended as a substitute for advice from a taxpayer's own legal and financial advisors. Additional information about tax law can be found on www.irs.gov.

Basics of the Premium Tax Credit (PTC)

• Refundable tax credit

• Must buy Marketplace coverage

• Must file Form 8962 to claim the PTC and reconcile any advance payments

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This summary provides basic information regarding basic tax law. Nothing in this summary supplants or replaces the requirements of the tax code. This summary is not intended as a substitute for advice from a taxpayer's own legal and financial advisors. Additional information about tax law can be found on www.irs.gov.

PTC Eligibility

• Must meet all of the following requirements:

• Income between 100-400% of Federal Poverty Line

• Taxpayer, spouse, or dependent must enroll in Marketplace coverage for a month that the enrollee is not eligible for coverage through employer or government plan

• Cannot be claimed as a dependent by another person

• Not file as Married Filing Separately

• Note: Some exceptions apply

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This summary provides basic information regarding basic tax law. Nothing in this summary supplants or replaces the requirements of the tax code. This summary is not intended as a substitute for advice from a taxpayer's own legal and financial advisors. Additional information about tax law can be found on www.irs.gov.

Advance Payments of PTC (APTC)

• Determined by Marketplace based on estimated household income and family size

• Paid directly to insurance company on the taxpayer’s behalf

• MUST file tax return to reconcile

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This summary provides basic information regarding basic tax law. Nothing in this summary supplants or replaces the requirements of the tax code. This summary is not intended as a substitute for advice from a taxpayer's own legal and financial advisors. Additional information about tax law can be found on www.irs.gov.

Reporting Changes in Circumstances

Examples:

• Family size or filing status (family = personal exemptions)

• Increase/decrease in household income

• Gain/loss of health care coverage or eligibility

• Moving to another address

Important: Report changes to the Marketplace when they happen

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This summary provides basic information regarding basic tax law. Nothing in this summary supplants or replaces the requirements of the tax code. This summary is not intended as a substitute for advice from a taxpayer's own legal and financial advisors. Additional information about tax law can be found on www.irs.gov.

How to claim the PTC

• Based on actual annual household income and family size reported on the tax return

• Claimed on tax return using Form 8962

–Reconciles APTC

–Results in either a refundable credit or repayment of excess advance payments

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This summary provides basic information regarding basic tax law. Nothing in this summary supplants or replaces the requirements of the tax code. This summary is not intended as a substitute for advice from a taxpayer's own legal and financial advisors. Additional information about tax law can be found on www.irs.gov.

Forms needed to claim PTC

• Form 1095-A from Marketplace

• Form 8962 to claim and reconcile PTC/APTC

• File Form 8962 with 1040, 1040A or 1040NR

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This summary provides basic information regarding basic tax law. Nothing in this summary supplants or replaces the requirements of the tax code. This summary is not intended as a substitute for advice from a taxpayer's own legal and financial advisors. Additional information about tax law can be found on www.irs.gov.

Return Preparer PTC Interview Best Practices

• Did your client receive Form 1095-A from Marketplace? • APTC

• Verify coverage months and who is covered

• Multiple policies issued

• Were there changes in circumstances during the year? • Married/divorced

• Eligible for government or employer sponsored coverage

• Months without coverage

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This summary provides basic information regarding basic tax law. Nothing in this summary supplants or replaces the requirements of the tax code. This summary is not intended as a substitute for advice from a taxpayer's own legal and financial advisors. Additional information about tax law can be found on www.irs.gov.