As Consumer Press reported in November, consumers have a number of options when trying to navigate the healthcare marketplace under Obamacare.
That also means that there are new tax implications to consider as that pesky April 15th deadline looms. For starters, you need to show that you indeed had health insurance. If you did (likely the majority of people) you simply check the box on your 1040 form. If you didn’t – or if you only had insurance for part of the year – it gets a bit trickier. Form 8965 will help you report your exemptions or calculate the penalty for the months you weren’t covered.
If you bought health insurance coverage on either the federal or a state exchange, you may have qualified for a tax credit. Many people chose to have this credit applied directly to the insurer. These amounts were determined by estimating what your annual income would be in 2014. At tax time, your actual income will be compared to that estimate. If it was lower, you can claim a refund; if it was higher, you will have to pay some or all of the surplus back, which is capped and based on a sliding income scale.
Consumers should receive Form 1095-A by January 31st, which shows how much your insurer received in those tax credits. That information is compared against Form 8692 to ensure you got the most credits for which you were eligible.
Because this is the first tax season to deal with such major shifts in healthcare coverage, it will likely be a bit trickier for exchange customers. Stay tuned for additional information as tax day approaches.